Marthas interiors has a current beta of 12 the market risk, Ask an Expert

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Martha's Interiors has a current beta of 1.2. The market risk premium is 6 percent and the risk-free rate of return is 4 percent. By how much will the cost of equity increase if the company completes an acquisition such that their company beta rises to 1.4?

A. 0.12 percent

B. 0.24 percent

C. 1.20 percent

D. 2.40 percent

E. 2.47 percent

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Financial Management, Finance

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