SCAN is a multi-divisional utility company. SCAN has four divisions with the following betas and proportions of the firm's total assets: ? $\begin{array}{lcc}
\text { Division } & \text { Beta } & \% \text { of Assets } \
\text { Electric \& Gas } & 0.85 & 60 \
\text { Bus transportation } & 0.95 & 10 \
\text { Real estate } & 1.40 & 25 \
\text { Recreation } & 1.15 & 5
\end{array}$ ?
The risk-free rate is 8 percent, and the market risk premium is 5 percent. If SCAN is considering a residential development, what should the firm use as its cost of equity in evaluating this project?
A) 13.05%
B) 16.20%
C) 12.25%
D) 15.00%

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The Answer of SCAN is a multi-divisional utility company. SCAN has four divisions with the following betas and proportions of the firm's total assets: ? $\begin{array}{lcc}
\text { Division } & \text { Beta } & \% \text { of Assets } \
\text { Electric \& Gas } & 0.85 & 60 \
\text { Bus transportation } & 0.95 & 10 \
\text { Real estate } & 1.40 & 25 \
\text { Recreation } & 1.15 & 5
\end{array}$ ?
The risk-free rate is 8 percent, and the market risk premium is 5 percent. If SCAN is considering a residential development, what should the firm use as its cost of equity in evaluating this project?
A) 13.05%
B) 16.20%
C) 12.25%
D) 15.00%

SCAN Is a Multi-Divisional Utility Company ? the Risk-Free Rate Is 8 Percent, and the Market

SCAN Is a Multi-Divisional Utility Company ?
the Risk-Free Rate Is 8 Percent, and the Market