What should be cost of capital for this corporate division

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Reference no: EM131235431

Your corporate division had the following net cash flows:

327_Table 6.jpg

Assume that the risk-free rate is 1% per annum and the equity premium is 3%. Use the certainty equivalence concept to answer the following questions:

• What should be a reasonable value approximation for this corporate division?
• What should be the cost of capital for this corporate division?

Reference no: EM131235431

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