help help help

[Khb_taylors]

Production Unlimited has an overall beta of .92 and a cost of equity of 10.8 percent for the firm overall. The firm is 100 percent financed with common stock. Division A within the firm has an estimated beta of 1.47 and is the riskiest of all of the firm's operations. What is an appropriate cost of capital for division A if the market risk premium is 6 percent?

 

[Deleted member 4993]

Production Unlimited has an overall beta of .92 and a cost of equity of 10.8 percent for the firm overall. The firm is 100 percent financed with common stock. Division A within the firm has an estimated beta of 1.47 and is the riskiest of all of the firm's operations. What is an appropriate cost of capital for division A if the market risk premium is 6 percent?

If you are stuck at the beginning - i.e. do not know where to start, please define the following terms:

1)........... Beta

2).......... Cost of equity

3).......... Cost of capital

4).......... Market risk premium

Please show your work, indicating exactly where you are stuck - so that we may know where to begin to help you.