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Chip buys a building for $ 2 2 5 , 0 0 0 , 2 0 % equity financed and the rest of the cost
Chip buys a building for $ equity financed and the rest of the cost from borrowed
funds at Were not sure what the building will be worth in one year, but weve narrowed it
to possibilities, each equally likely: After one year it may be worth $ or $ or
$ or $ What is Chips expected ROE and what is his best possible ROE and
his worst possible ROE?
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