Will the acquisition have on wilsons cost of equity capital

Reference no: EM13261042

Wilson's has a cost of equity of 13.5 percent. The market risk premium is 9.4 percent and the risk-free rate is 0.7 percent. The company is acquiring a competitor, which will change the company's beta to 1.7. What effect, if any, will the acquisition have on Wilson's cost of equity capital?

a. no effect
b. decrease of 1.92 percent
c. decrease of 2.08 percent
d. increase of 1.86 percent
e. increase of 1.99 percent

Reference no: EM13261042

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