Answer:
The answer is letter C
Explanation:
Market interest rates decline sharply.
Answer:
expansion should be undertaken as it has a positive net present value
The cost of equity from retained earnings based on the DCF approach=9.44%
Explanation:
- The cost of equity from retained earnings based on the DCF approach can be calculated as follows,
- Therefore, rs =
+ g
Answer:
13.85% and 18.9%
Explanation:
As in this exercise we have a free risk asset we will assume that the t-bill has a standard deviation of 0%, so let´s firts calculate the expected return:

where E(r) is the expected return,
is the return of the i asset and
is the investment in i asset, so applying to this particular case we have:


the calculation of standar deviation follows the same logic of the previous formula:

