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Your firm is considering expanding its household products division. You iden- tify Procter & Gamble (PG) as a firm with comparable investments. Suppose PGs equity has a market capitalization of $144 billion and a beta of 0.57. PG also has $37 billion of AA-rated debt outstanding, with an average yield of 3.1%. Estimate the cost of capital of your firms investment given a risk-free rate of 3% and a market risk premium of 5%

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Financial Management, Finance

Category:- Financial Management
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