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Random Inc generates operating profit of either $4 or $5 M with equal probabilities, but the risk is idiosyncratic. Risk-free rate is 3%. The
Random Inc generates operating profit of either $4 or $5 M with equal probabilities, but the risk is idiosyncratic. Risk-free rate is 3%. The company pays 21% on its profits. KRR decided to take the company private and offered shareholders of Random Inc a total purchase price of $140M. KRR plans to finance the transaction with as much risk-free debt as possible. What is the return on this investment that KRR can expect to receive? [enter your answer in % with two digits precision]
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Statistics For Business Decision Making And Analysis
Authors: Robert Stine, Dean Foster
2nd Edition
978-0321836519, 321836510, 978-0321890269
