Exhibit 14.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) At the end of the year 2010 the BRK Corporation had free cash flow to equity (FCFE) of $250,000 and shares outstanding of 200,000. The company projects the following annual growth rates in FCFE: Year Growth Rate 2011 10% 2012 15% 2013 20% 2014 25% 2015 20% 2016 15% 2017 10% 2018 7% From year 2019 onward growth in FCFE is expected to remain constant at 5% per year. The stock has a beta of 1.3 and the current market price is $55. Currently the yield on 10-year Treasury notes is 5% and the equity risk premium is 4%. 80. Refer to Exhibit 14.7. Calculate the required rate of return on equity. a. 5% b. 9.2%