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Hi Sir
I want to know that how the examiner has calculated the 14% discount rate as in the mark scheme it using the asset beta in CAPM forumil. PLZ expplain me thisWhen calculated the adjusted present value (the APV) in arriving at the base case NPV we always discount the cash flows at the cost of equity were it all equity financed, which is arrived at by using the asset beta (because if it was all equity financed then the equity beta would be equal always to the asset beta).
I do explain this in my free lectures on APV (and on CAPM).
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