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Propose a range of cost of capital estimates to consider

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Reference no: EM131116329

Suppose General Motors managers would like to invest in a new production line and must determine a cost of capital for the investment.

The beta for GM is 1.185, the beta for the automobile industry is 0.97, the equity premium on the world market is assumed to be 6%, and the risk-free rate is 3%.

Propose a range of cost-of-capital estimates to consider in the analysis.

Reference no: EM131116329

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