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Suppose you borrow $ 4 8 8 3 3 . 8 8 M when financing a gym with a cost of $ 9 4 6
Suppose you borrow $ when financing a gym with a cost of $ You expect to generate a cash flow of $ at the end of the year if demand is weak, $ if demand is as expected and $ if demand is strong. Each scenario is equally likely. The current riskfree interest rate is risk of debt and there's a risk premium for the risk of the assets. What would be the realized return of equity if the demand is strong?
HINT: If you need it to compute the WACC of the firm, add the risk free plus the risk premium
NOTE: Provide your answers in Percentages. EG for you must enter for you must enter etc.
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