Question
Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): r RF = 3%; r M = 9%; RP M =
Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE):
rRF = 3%; rM = 9%; RPM = 6%, and beta = 1.4
1. Assume now that there is no change in inflation, but market risk premium increases by 2%. What is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations?.
2. If inflation increases by 3% and market risk premium increases by 2%, what is WCE's required rate of return now? Round your answer to two decimal places. Do not round intermediate calculations?.
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Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
978-0132148238
