Assume risk-free rate of and equity market risk

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An Analyst has used the percent of sales method to forecast the items in the table below for 2011-2013 for New Engery, Inc., which is all equity financed. The beta for the company's stock is 1.2 and the company's tax rate is 38%. Assume a risk-free rate of 4% and an equity market risk premium of 5%.

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