The market value of the firm is $546.9 million. The firm's cost of capital at market was 3.3 percent.
The probable costs of alternative forms of financing are as follows:
The recommended policy for an acceptable require return on investment (ROI) for investment in a subsidiary is an ROI equal to the probable cost of financing based on the issuance of new common stock. Within the context of this policy, the minimum ROI for the proposed investment will be eight-percent.