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Company As equity value today is EUR 2,550,000 and in one year it can be worth EUR 2,440,000 with probability 0.5 or EUR 3,876,000 with
Company As equity value today is EUR 2,550,000 and in one year it can be worth EUR 2,440,000 with probability 0.5 or EUR 3,876,000 with probability 0.5. The company will not distribute any dividend. Also the companys expected return of debt is 2.50% and its debt-to-equity ratio is 2. Assuming a Modigliani Miller world without taxation or frictions, what is the unlevered return of equity of Company A
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