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Amazonas has three operating divisions: AZ capital (40\%), AZ Technology (30\%) and AZ Energy (30\%)....

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Accounting

image Amazonas has three operating divisions: AZ capital (40\%), AZ Technology (30\%) and AZ Energy (30\%). The CFO wants to estimate the cost of capital for each division, to help with capital budgeting. Amazonas is financed 50% by debt, with D=.15. The current risk-free interest rate is 5% and the expected market return is 10%. The following three competitors have investments similar to those of Amazonas three divisions (with debt practically risk-free): (a) What is the cost of capital for each division? (b) What is Amazonas equity beta

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