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07 Jan

Risk free rate is 3%. Equity risk premium is 5%

by jagguarpaw On: Finance - 0 Comment

Question: Risk free rate is 3%. Equity risk premium is 5%.

  1. Risk free rate is 3%. Equity risk premium is 5%. Beta is 2. Using the Capital Asset Pricing Model, compute the cost of equity capital.
  2. Earnings before Interest and Taxes is 200. Depreciation is 50. Capital Expenditure is 55. Net additions to Working Capital is 20. Taxes are 25. Compute Cash Flow From Assets (CFFA).
  3. If Net Present Value (NPV) is greater than Zero, you:
  4. Accept the project.
  5. Reject the project.
  6. Flip a coin. d. Sleep on it.
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