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Assume M&M holds. Your firm has a total enterprise value of $200m. Its publicly traded equity has a market value of $100m and its publicly

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Assume M&M holds. Your firm has a total enterprise value of $200m. Its publicly traded equity has a market value of $100m and its publicly traded debt has a market value of $100m. The expected return on the firm's equity is 20% and the expected return on the firm's debt is 5%. The equity beta is 1.3 and the debt beta is 0.6. The risk free rate is 5%. Assume there are no taxes. What is the firm's overall expected return? 11.5% 12.5% 13.5% 10.5%

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