You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of
Posted: Sun Jun 05, 2022 10:06 am
You are a consultant to a firm evaluating an expansion of its
current business. The cash-flow forecasts (in millions of dollars)
for the project are as follows:
On the basis of the behavior of the firm’s stock, you believe
that the beta of the firm is 1.50. Assume that the rate of return
available on risk-free investments is 5% and that the expected rate
of return on the market portfolio is 13%.
What is the cost of capital?
current business. The cash-flow forecasts (in millions of dollars)
for the project are as follows:
On the basis of the behavior of the firm’s stock, you believe
that the beta of the firm is 1.50. Assume that the rate of return
available on risk-free investments is 5% and that the expected rate
of return on the market portfolio is 13%.
What is the cost of capital?