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If you had access to the following information, what is the best estimate of the market risk premium for use in determining Ke? 5-year Treasury

If you had access to the following information, what is the best estimate of the market risk premium for use in determining Ke?

  • 5-year Treasury note = 2.1%
  • current stock price = $79.84
  • average annual return on S&P 500 over past five years = 10.0%
  • 6-month Treasury bill rate = 1.8%
  • company's unlevered beta = 1.19
  • tax rate = 27.0%

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