Dear Sir
Could you please help me regarding cost of equity.
I used the ungeared beta 0.952 calculated ungeared cost of equity 4%+0.952(10%-4%)=9.712%, then use MM proposition 2 formula calculate geared cost of equity 9.712%+0.8(9.712%-8%)(3496/17325)=9.99% however it is different from the answer. Could you please let me know where I did wrong.
Ask the Tutor ACCA FM
Eview S/D 17 Q2
This question was in the AFM (P4) exam, not in the FM (F9) exam.
Please ask in the AFM forum.
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