What is the required rate of return on the sanding machine

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Initially Firm A has a beta of 1.3, when Rrf= 7 percent and Rm=12 percent. The firm now sells 10 percent of its assets (beta=1.2) and uses the proceeds to purchase another asset, a sanding machine, with a beta of .7.

a) What is the required rate of return on the sanding machine?

b) What is the new overall required rate of return for Firm A?

Reference no: EM13267757

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