Lex Service plc – Cost of Capital Questions: 1. Why does Lex service need to discuss the cost of capital today (1993) and at such high level? 2. What should cost of (equity and unlevered) capital for Lex Service had been if the company had not undergone all the recent (1991-93) restructuring? 3. In order to value future investments should the company use a single hurdle or multiple divisional hurdles? Will that make a significant difference in this case? 4. Produce balance sheets at market values for each of the three individual businesses. 5. What is the cost of capital (equity and unlevered) for each of Lex Service’s individual businesses, assuming the future target debt ratios?