Question 7 (15 marks) You have R100 to invest in either of the following two companies. Without drawing on any external insights that you may have of these companies, consider the information contained in the following table of data containing the expected returns, standard deviation of returns and coefficient of variation of these two stocks: Expected return, E(R) Standard deviation, X Coefficient of variation (cov) Beta (unlevered) MERCEDES-BENZ 12% 8% 0.67 0.8 TESLA 18% 12% 0.67 1.2 7 a.) Using the data contained in the table above, explain which stock you would prefer to invest in and why 7 b. Suppose that the company tax rate is currently 30% and that the capital structures of the companies are as follows Use to data supplied in the table below along with the unlevered betas supplies above to calculate the levered beta for Mercedes Benz Debt Equity MERCEDES-BENZ 40% 60% TESLA 20% 80% 7c.) What would you expect the return of Mercedes Benz to be if the market is expected to increase by +17%