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Bobs biggest competitor, Brawny Bills BBQ and Burgers is also considering expanding and Bill also needs a hurdle rate to use in his financial analysis.
Bobs biggest competitor, Brawny Bills BBQ and Burgers is also considering expanding and Bill also needs a hurdle rate to use in his financial analysis. Bill has a $3,000,000 loan outstanding that has a 5% interest rate, and his equity is estimated to be worth $3,000,000. Bills Beta is estimated to be 1.75 and the market risk premium is estimated to be 8.5%. If the risk free rate is 3%, what should Bill use as a hurdle rate?
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