Estimate a risk adjusted cost of capital for the two


1. Estimate a risk adjusted cost of capital for the two business units and comment on whether Meyer's graph is accurate (case Figure 1).

In estimating the cost of capital, consider the WACC estimates based on the comparable companies.

2. Calculate the EVA of Chestnut's divisions using a constant WACC and the divisional risk-adjusted WACC.

How does the choice of a constant versus risk-adjusted hurdle rate affect the EVAof Chestnut's two divisions?

Attachment:- Financial Data.rar

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Financial Management: Estimate a risk adjusted cost of capital for the two
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