Equity as of end 2022 = $1,000 Net income in 2023 = $200 CAPEX = 25% of NI Payout = excess income over capex

CAPM assumptions;

Standard deviation of firm r = 15% Standard deviation of market r = 10% Correlation coefficient = 0.5 RFR = 5% Expected market return = 15%

1. Which dividend policy does the firm use?

2 Calculate the FV of equity using 3 methods;

1. FCFE 2. P/B 3. EVA