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9. Filmore Enterprises is expected to be similar to a company composed of 40% CPC and 60% EAT. a. Compute the beta coefficient for
9. Filmore Enterprises is expected to be similar to a company composed of 40% CPC and 60% EAT. a. Compute the beta coefficient for a 40/60 portfolio of CPC-EAT and then determine its required rate of return. How does the required return compare with the expected return from Table 2? Explain why you would or would not purchase this portfolio. b. Suppose Kathy and Randy decided to provide a greater share of the up-front capital so that the long-term debt ratio was below that represented by the CPC-EAT portfolio. What impact would this have on Filmore Enterprises' risk and required return on equity?
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