Question
Assume your calculated asset beta for the project (beverage-making-technology to be included in Tesla vehicles) is 0.67. Now Elon Musk has asked you to determine
Assume your calculated asset beta for the project (beverage-making-technology to be included in Tesla vehicles) is 0.67. Now Elon Musk has asked you to determine the required return on the equity that the firm plans to issue to PARTIALLY finance the project. The project itself will be financed with half debt and half equity. You also look up the risk-free rate and it currently equals 2.0%; and you determine that the accepted market risk premium (these days) is 4.5%. Tesla's company tax rate is 20% What is the re for the project? Answer should include four digits to the right of the decimal point.
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