Use the following information for the next two problems.

Consider the following information for the FirstEvansville investors:

liquidity premium 5.5%; risk-free rate 6%; advisory premium 9%;

investment risk premium 11.5%; hubris projection premium 8%

What is the required rate of return for the equity holders of FirstEvansville if it is a publicly traded company?

a. 5.5%

b. 6.0%

c. 14.0%

d. 14.5%

e. 17.5%

What is the required rate of return for the equity holders of FirstEvansville if it is a private company?

a. 23.0%

b. 25.5%

c. 32.0%

d. 40.0%

e. 46.0%