Key Topics: Cost of capital, risk management, and strategic business units.

Models Covered: Capital Asset Pricing Model (CAPM), beta estimation, and risk assessment models.

Description: Morada Co’s case addresses the company’s strategic options to manage its high cost of capital. It evaluates proposals involving debt reduction, diversification through a new business unit, and risk management systems. The analysis includes calculating the company’s cost of equity and weighted average cost of capital (WACC) under different scenarios and understanding the impact of corporate strategy on risk and return.