- Capital Budgeting
- Beta and Required Return of a Project
Cost of Equity for a Firm
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What is the cost of equity for a firm for which the required return on assets is 14%, the cost of debt is 11%, and the target debt/equity ratio is 0.5? Ignore taxes.
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Required return on assets=WACC= (E/V)xRe + (D/V)xRdx(1-Tc)
Re = cost of equity
Rd = cost of debt
E = the market value of the ...
Required return on assets is considered.