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A new business opportunity has an 80% chance of being worth $750000 next year and a 20% chance of being worth $150000. The appropriate expected
A new business opportunity has an 80% chance of being worth $750000 next year and a 20% chance of being worth $150000. The appropriate expected rate of return is 13%. Assume that the new opportunity will be financed with a $500000 bank loan. What rate of return will the levered equity holder earn if the business pays off $750000 in one year
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