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QUESTION
The risk-free interest rate is 10%, the expected return on the market portfolio is 18%, and a firm's debt-to-equity ratio is 100%, so debt and equity...
The risk-free interest rate is 10%, the expected return on the market portfolio is 18%, anda firm’s debt-to-equity ratio is 100%, so debt and equity each comprise 50% of capital.Assume the corporate tax rate is zero.The cost of debt capital is 12% and the beta of equity is 1.500.Determine the expected return of assets.
