Question
Initially, Firm X has a beta of 1.3, when Rrf = 8 percent and Rm = 12 percent. The firm now sells 10 percent of
Initially, Firm X has a beta of 1.3, when Rrf = 8 percent and Rm = 12 percent. The firm now sells 10 percent of its assets (beta = 1.2) and uses the proceeds to purchase another asset, a lathe machine, with a beta.8.
a. what is the required rate of return on the lathe?
b. what is the new overall required rate of return for firm X?
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CFIN
Authors: Scott Besley, Eugene Brigham
5th edition
1305661656, 9781305888036 , 978-1305666870
