Prior to implementation of proposal
Cost of equity 1
Cost of debt 1
Market value of debt 2
Market value of equity 3
Cost of capital 1
After implementing the proposal
Coeden Co’s current asset beta 1
Asset beta of hotel services business only 2
Equity beta of hotel services business only 2
Cost of equity 1
Cost of capital 1
Assumptions (1–2 marks per explained assumption, award marks for reasonable alternative 
assumptions not in the model answer) 2–3
Comments 2–3

Max marks 20