The Delta Co
Subject:FinancePrice: Bought3
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?
