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Assume a firm is financed with $1000 debt that has a market beta of 0.4 and $3000 equity. The risk -free rate is 3%, the
Assume a firm is financed with $1000 debt that has a market beta of 0.4 and $3000 equity. The risk -free rate is 3%, the equity premium is 6%, and the firms overall cost of capital is 11%. What is the expected return on the firms equity?
A. 12.9%
B. 9.0%
C. 11.0%
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