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What is the value of division 1

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Consider a firm that is made up of two divisions. Division 1 is in the personal computer business, with a βComp = 1.5. Division 2 is in the server business, with a βServer = .9. The firm is 100% equity financed and its market capitalization is $120 billion. Its historic return has been 10%. With a risk-free rate of 4% and a market-premium of 6%, what is the value of Division 1, the computer division (in billions)?

Reference no: EM133114248

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