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QUESTION
The firm has a current beta of 1. The market risk premium is 8.9 percent and the risk-free rate of return is 3.2 percent.
The firm has a current beta of 1.48. The market risk premium is 8.9 percent and the risk-free rate of return is 3.2 percent. By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.60?
