Miller Sisters Has an Overall Beta of 0

question 22

Multiple Choice

Miller Sisters has an overall beta of 0.79 and a cost of equity of 11.2 percent for the firm overall.The firm is 100 percent financed with common stock.Division A within the firm has an estimated beta of 1.08 and is the riskiest of all of the firm's operations.What is an appropriate cost of capital for division A if the market risk premium is 9.5 percent?

• A)13.12 percent
• B)13.96 percent
• C)14.63 percent
• D)15.77 percent
• E)16.01 percent

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