You expect your equity investment to return 20 percent. There are no taxes. What would your return…
1. Acetate, Inc., has dishonorable supply delay a traffic estimate of $20 favorite and score delay a traffic estimate of $10 favorite. The require of the score is 14 percent. The ordinary Treasury-bill reprove is 8 percent, and the look-fored traffic enhancement is 10 percent. The beta on Acetate’s equity is 0.9.
a. What is Acetate’s score-equity relative?
b. What is the firm’s overall required repay?
2. You endow $100,000 in the supply of the Liana Rope Company. To establish the endowment, you ascititious $75,000 from a chum at a require of 10 percent. You look-for your equity endowment to repay 20 percent. There are no taxes. What would your repay be if you did not use leverage?