5. The expected return for the general market is 12.1 percent and the risk premium in...

Question

Question

5. The expected return for the general market is 12.1 percent and the risk premium in the market is 8.5 percent. You Corp, AF

Answer 1

Answer #1

Risk Free Rate = 0.121 - 0.085 = 3.60%

Market Risk Premium = 8.50%

Required Rate of You Corp = 0.036 + 0.795(0.085) = 10.36%

Required Rate of AFC Inc = 0.036 + 0.693(0.085) = 9.49%

Required Rate of NPV Inc = 0.036 + 0.475(0.085) = 7.64%

Answer 2

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