Question: Fastchip is a small technology company with a beta of
Fastchip is a small technology company with a beta of 1.5 and a market capitalization of $200 million. Currently, long-term government securities are yielding 5.0 percent, intermediate governments are yielding 4.0 percent, and T-bills are yielding 3.3 percent. Calculate the required rate of return using all three risk-free rates. Choose which one would be the most aggressive and which would be the most conservative to use in valuing cash flows. Which would you prefer to use, and why?
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