A company has earnings before interest and taxes (EBIT) of $5 million, a debt of $10 million with a cost of debt of 8%, and 10 million outstanding shares. The equity risk premium is 6% and the risk-free rate is 3%. Calculate the company's equity value using the Capital Asset Pricing Model (CAPM) and the Weighted Average Cost of Capital (WACC).

Answer rating: 100% (QA)

The detailed answer for the above question is provided below To calculate the companys equity value using the CAPM we need to use the following formul... View the full answer