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Suppose you borrow $51950.47M when financing a gym with a cost of $86057.48M. You expect to generate a cash flow of $84556.97M at the end
Suppose you borrow $51950.47M when financing a gym with a cost of $86057.48M. You expect to generate a cash flow of $84556.97M at the end of the year if demand is weak, $89070.95M if demand is as expected and $120206.12M if demand is strong. Each scenario is equally likely. The current risk-free interest rate is 5.26% (risk of debt) and there's a 12.87% risk premium for the risk of the assets. What should the value of the equity be?
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