Carla is starting an athletic clothing chain and has chosen REI as a comparable. REI has an

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Carla is starting an athletic clothing chain and has chosen REI as a comparable. REI has an equity beta of 1.80. REI also has $80M in equity and $40M in debt, which is has a yield of 4%. The expected return of the market is 7% and the risk- free rate is 2%.

What is the appropriate discount rate to use for Carla's athletic clothes startup?

Carla's firm is made up of $60M in equity and $20M in debt, which is risk-free. What is the expected return on equity for Carla's company?

Related Book For answer-question

Entrepreneurial Finance

ISBN: 978-1305968356

6th edition

Authors: J. Chris Leach, Ronald W. Melicher

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Posted Date: Mar 14, 2023 01:56 AM

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Carla is starting an athletic clothing chain and has chosen REI as a comparable. REI has an

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