Question: Suppose Uber has only one project with a cash flow of $40,000 and an unlevered cost of equity of 10%. If the company borrows $20,000
Suppose Uber has only one project with a cash flow of $40,000 and an unlevered cost of
equity of 10%. If the company borrows $20,000 at 5% to make the investment, what is
expected return to equity holders?
The answer is 16.11%, but I am not sure how my prof got that answer.
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