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Business, 24.08.2021 23:10 tasa123l14

Weston Enterprises is an​ all-equity firm with two divisions. The soft drink division has an asset beta of 0.57​, expects to generate free cash flow of $62 million this​ year, and anticipates a 3% perpetual growth rate. The industrial chemicals division has an asset beta of 1.03​, expects to generate free cash flow of $60 million this​ year, and anticipates a 2% perpetual growth rate. Suppose the​ risk-free rate is 4% and the market risk premium is 5%. a. Estimate the value of each division.
b. Estimate​ Weston's current equity beta
c. Estimate​ Weston's current cost of capital. Is this cost of capital useful for valuing​ Weston's projects? How is​ Weston's equity beta likely to change over​ time?
Round to two decimal points.

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