Suppose you borrow $54678.89M when financing a gym with a cost of $89000.24M. You expect to generate a cash flow of $76117.18M at the end of the year if demand is weak, $87612.15M if demand is as expected and $124791.09M if demand is strong. Each scenario is equally likely. The current risk-free interest rate is 4.67% (risk of debt) and there's a 10.47% risk premium for the risk of the assets. What should the value of the equity be? -

What is the expected return of equity?

What would be the realized return of equity if the demand is strong?

What would be the realized return of equity if the demand is weak?

(HINT: If you need it, to compute the WACC of the firm, add the risk free plus the risk premium)