Corporate project is 75% like risk-free debt and 25% like equity. Assume that the risk-free rate of

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Corporate project is 75% like risk-free debt and 25% like equity. Assume that the risk-free rate of return is 2% perannum and that the expected rate of return on the market is 2% + 4% = 6%. This project promised is to deliver $200 next year. This firm has a 5% probability of going bankrupt. What is the promised rate of return for the firm?

Posted Date: May 19, 2024 03:17 PM

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Corporate project is 75% like risk-free debt and 25% like equity. Assume that the risk-free rate of

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