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If the risk-free rate is 5% and the equity risk premium is 5%, then a corporation with 100% equity financing and a beta of 0.85

If the risk-free rate is 5% and the equity risk premium is 5%, then a corporation with 100% equity financing and a beta of 0.85 is a:

  • A. Promising investment if the ROIC is 9.20
  • B. Poor investment if the ROIC is 12.25
  • C. Promising investment if the ROIC is 8.00
  • D. Poor investment if the ROIC is 15.25
  • E. None of the above

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