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I understand that we can use the normal CAPM formula ‘backwards’ to calculate the equity beta.
14% = 4.5% + Beta x 4%.
The gives an equity beta of 2.375.I am struggling to get Equity Beta of 2.375. Please can you explain or degear the below equation in few steps in order to get 2.375 Be?
14% = 4.5% + Beta x 4%. = 2.375?Sorry! I got the answer
14% = 4.5% + Beta x 4%
(14% – 4.5%) = 4%Beta
9.5%/4% = 2.375
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