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Suppose you borrow $36730.28M when financing a gym with a cost of $86672.92M. You expect to generate a cash flow of $70429.89M at the end
Suppose you borrow $36730.28M when financing a gym with a cost of $86672.92M. You expect to generate a cash flow of $70429.89M at the end of the year if demand is weak, $87020.18M if demand is as expected and $112461.96M if demand is strong. Each scenario is equally likely. The current risk-free interest rate is 4.36% (risk of debt) and there's a 10.88% risk premium for the risk of the assets. What should the value of the equity be?
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