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The Delta Co

Finance Apr 02, 2022

The Delta Co. owns retail stores that market home building supplies. Largo, Inc. builds single family homes in residential developments. Delta has a beta of 1.22 and Largo has a beta of 1.34. The risk-free rate of return is 4 % and the market risk premium is 6.5 %. What should Delta use as its cost of equity if it decides to purchase some land and come up with a new residential community?

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