If beta is given for the company and not the division's how would you calculate...

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Finance

If beta is given for the company and not the division's how would you calculate the divisional beta for each division? For example,

INPUTS USED IN THE MODEL

Company Data

Common Stock:

Current Price of Common Stock

$92.86

Beta

1.13

Common Stock Dividend, recently paid

$1.00

Earnings per share, recent

$6.25

ROE

4.725%

Company risk premium

2.0%

Debt:

Pre-tax cost of debt

3.36%

Tax rate

26%

Capital Structure:

Target capital structure for common stock

75%

Target capital structure for debt

25%

Market Data

90-day Treasury Bill Rate

0.35%

10-year Treasury Bond Rate

1.92%

Expected Market Dividend

$61

Current Market Index Value

$4,287

Expected long-term US GDP growth rate

3.6%

2. Estimate GE's divisional cost of equity and divisional cost of capital

Division

Weight (measured as % of GE's total Sales)

Divisional Beta

Divisional Cost of Equity

Divisional Cost of Capital

Healthcare

45%

Aviation

44%

Power Generation

11%

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