17. MM Proposition 2 (S16-3) Archimedes Levers is financed by a mixture of debt and equity.

You have the following information about its cost of capital:

rE = rD = 12% rA =

βE = 1.5 βD = βA =

rf = 10% rm = 18% D/V = 0.5 Can you fill in the blanks?