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    CAPM approach

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    The case is about cost of capital. I do not have idea how to solve it, which formulas to use... I do not understand anything. I do not know where which formulas to use. Could you explain in each question which formulas should I use. I don't ask for doing this assignment for me, I just need some help and some more explanation to solve them. If you can not solve all the questions, solve as much as you can. Even 1-2 questions make a big sense. This course is very important for me and case studies are 40% of overall degree, so please help me.
    Thanks in advance.

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    Solution Preview

    (1) Yes, it does seem appropriate because the unlevered beta, or asset beta and the operating leverage are linked since this beta is determined by both the business in which the company operates and the operating leverage of that company. Operating leverage relates change in activity (measured by sales) with change in result (either operating profit or net income). Higher operating leverage will lead to greater risk for the ...

    Solution Summary

    CAPM approach is applied.