o The total market value of the equity of Financial Freedom Plc is N6 million and the total value of its debt is N1million. The beta value of the equity is estimated to be 1.5 and the expected market risk premium is 10%. The risk free rate of interest is 8% (a) What is the required return on the Financial Freedom Plc equity? (b) What is the beta of the company's existing portfolio of assets? (c) Estimate the company's cost of capital. (d) Estimate the discount rate for an expansion of the company's present business. (e)Suppose that the company replaces N3 million debt with equity, does the beta of the equity change? (f) What would the company cost of capital be now? (g) If the company wishes to diversify into another industry with a beta value of 1.2, what would be the required rate of return? 

The total market value of the equity of Financial Freedom Plc is N6 million and the total value of its debt is N1million. The beta value of the equity is estimated to be 1.5 and the expected market risk premium is 10%. The risk free rate of interest is 8% (@) What is the required return on the Financial Freedom Plc equity? (b) What is the beta of the company's existing portfolio of assets? (c) Estimate the company's cost of capital. (d) Estimate the discount rate for an expansion of the company's present business. (e)Suppose that the company replaces N3 million debt with equity, does the beta of the equity change? (f) What would the company cost of capital be now? (g) If the company wishes to diversify into another industry with a beta value of 1.2, what would be the required rate of return?

The total market value of the equity of Financial Freedom Plc is N6 million and the total value of its debt is N1million. The beta value of the equity is estimated to be 1.5 and the expected market risk premium is 10%. The risk free rate of interest is 8% (a) What is the required return on the Financial Freedom Plc equity? (b) What is the beta of the company's existing portfolio of assets? (c) Estimate the company's cost of capital. (d) Estimate the discount rate for an expansion of the company's present business. (e) Suppose that the company replaces N3 million debt with equity, does the beta of the equity change? (f) What would the company cost of capital be now? (g) If the company wishes to diversify into another industry with a beta value of 1.2, what would be the required rate of return?