Question
Assuming that; The ratio of variable costs to sales, working capital to sales, and capital expenditure to sales are the same as year 0 (2016);
Assuming that;
The ratio of variable costs to sales, working capital to sales, and capital expenditure to sales are the same as year 0 (2016);
The Debt-to-Equity (D/E) ratio is the same as year 0 (2016) and will remain constant;
Fixed costs and depreciation from year 1 (2017) onwards are the same as the average over the last 4 years;
Cost of debt is 7.5%, the risk free rate is 3% and expected effective tax rate is 26%.
With these assumptions, and this data https://drive.google.com/file/d/0BzfwwFlPWBEFTUhZNndZM0s1VFE/view?usp=sharing
How would I calculate the cost of equity of 'Facebook' using CAPM?
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