Question: 1. What is the return on Equity Using the CAPM 2. How much is the Weight of Equity(WE) and Debt (WD)? 3. What is the

1. What is the return on Equity Using the CAPM 2.

1. What is the return on Equity Using the CAPM

2. How much is the Weight of Equity(WE) and Debt (WD)?

3. What is the WACC?

The firm's stock has beta b = 1.4. The expected market return is E(TM) = 10%. The risk-free rate r = 4%. Abracadabra's equity has a market value E = USD10,000. Abracadabra's debt has a market value D = USD 15,000. Abracadabra can borrow new funds at a cost of r. = 6%. Abracadabra's corporate tax rate is Tc = 40%

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