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Suppose that Xyler Inc.s beta is estimated to be 1.2. If the expected return on the market is 7.5% and the risk-free rate rate is

Suppose that Xyler Inc.s beta is estimated to be 1.2. If the expected return on the market is 7.5% and the risk-free rate rate is 2%, what is the model and the discount rate that Xyler should use for stock valuation?

a. CAPM; 8.6%

b. CAPM; 6.6%

c. Dividend growth model; 11%

d. CAPM; 11%

e. Dividend growth model; 8.6%

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