Question
Suppose you borrow $48,833.88M when financing a gym with a cost of $94,629.01M. You expect to generate a cash flow of $56,304.24M at the end
Suppose you borrow $48,833.88M when financing a gym with a cost of $94,629.01M. You expect to generate a cash flow of $56,304.24M at the end of the year if demand is weak, $97,208.89M if demand is as expected and $109,326.47M if demand is strong. Each scenario is equally likely. The current risk-free interest rate is 5.19% (risk of debt) and there's a 12% 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. E.G. for 60.15% you must enter 60.15, for 9.05% you must enter 9.05, etc.
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