Divisional costs of Capital Newtown Propane currently has only a wholesale division and uses only equity capital; howeve
Posted: Sun Apr 17, 2022 6:18 pm
Divisional costs of Capital Newtown Propane currently has only a wholesale division and uses only equity capital; however, it is considering creating marketing and retail divisions. Its beta is currently 1.1. The marketing division is expected to have a beta of 1.8, because it will have more risk than the firm's wholesale division. The retail division is expected to have a beta of 0.7, because it will have less risk than the firm's wholesale division. The risk-free rate is 3.1%, and the market risk premium is 6.2%. Based on this information, fill in the missing cost of capital information below: Wholesale division Marketing division Retail division If 55% of Newtown Propane's total value ends up in the wholesale division, 20% in the marketing division, and 25% in the retail division, then its investors should require a return of