question archive A firm has a return on equity of 12
A firm has a return on equity of 12
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A firm has a return on equity of 12.4% according to the dividend growth model and a return of 18.7% according to the capital asset pricing model. The market rate of return is 13.5%. What rate should the firm use as the cost of equity when computing the firm's weighted average cost of capital (WACC)?
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The arithmetic average of 12.4 percent and 18.7 percent
the above is answer..
because this would provide more rational return on equity
