Mid-States is a multi-divisional utility company. Mid-States has four divisions with the following betas and proportions of the firm's total assets: Division Beta % of Assets Electric & Gas 0.75 45 Bus transportation 1.21 20 Real estate 2.80 25 Recreation 1.85 10 The risk-free rate is 2 percent and the return on the stock market as a whole is 15%. If Mid-States is considering a residential development, what should the firm use as its cost of equity in evaluating this project
Mid-States is a multi-divisional utility company. Mid-States has four
divisions with the following betas and proportions of the firm's total
assets:
Division Beta % of Assets
Electric & Gas 0.75 45
Bus transportation 1.21 20
Real estate 2.80 25
Recreation 1.85 10
The risk-free rate is 2 percent and the return on the stock market as a
whole is 15%. If Mid-States is considering a residential development,
what should the firm use as its
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