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Sir Im a self study student and I absolutely fear this paper..pls help me with this question
the question says that 75% equity and 80 % debt is to finance other activities so when calculating the asset beta why cant we take 25% of equity and 20% of debt and then calculate the asset beta
thanks alot!No. It is the equity that carries the risk. 75% is attributed to other activities and therefore 25% is component production.
Sir can you also explain me why do we have to calculate WACC when we have already used the capm formula…is 14.4% not the cost of capital?
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