Question
A company is financed for 30% of its capital with debt and the rest with equity. Debt is risk-free, so its beta is Bd =
A company is financed for 30% of its capital with debt and the rest with equity. Debt is risk-free, so its beta is Bd = 0 and its cost is the risk - free rate rF. Equity has a beta of B (little e) = 2
What is the firms asset beta, assume that the CAPM is correct, what is the cost of capital for the firm, assume a risk - free interest rate of 5% and a market risk premium of 6%
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Entrepreneurial Finance
Authors: Steven Rogers
4th Edition
1260461440, 978-1260461442
