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I am a little bit confused as to when I am suppose to use the Ke = Kue + (1- T) (Kue – Kd) Vd/Ve formula and when to use the asset beta formula. I always use the incorrect one when I am doing a paper question. Please help.
It is rare to need to use the Ke formula – usually it is the asset beta formula, but it really depends on whether you are given betas in the question or not.
(Both ways will in fact end up giving the same result (and would therefore get the marks whichever way you answer) but using the asset beta formula is almost always the quickest way in the exam).
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