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This is the complete working from the study hub.
1.25 = (150/(150 + 35)) × ?e + (35/185) × 0.20
?e = 1.495
Use CAPM to find the cost of equity as 6% + (1.495 × 8%) = 17.96% i.e. 18.0% to one decimal place of a percentage.
This is the working on the study hub.
1.25 = (150/(150 + 35)) × ?e + (35/185) × 0.20
?e = 1.495
(I sent the previous question multiple times by accident.)
Hi, you worked out the question I’m referring to. Where did the three come from? And what is the first formula you showed?
I do not think so because it is not a cost necessary to get the asset to its present location and condition.
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