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Find realized return of equity

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Reference no: EM132673328

Suppose you borrow $52,391.03M when financing a gym which cost is at $92,817.65M. You expect to generate a cash flow of $74,710.05M at the end of the year if demand is weak, $86,409.01M if demand is as expected and $106,729.13M if demand is strong. Each scenario is equally likely. The current risk-free interest rate is 4.49% (risk of debt) and there's a 13.05% risk premium for the risk of the assets. What would be the realized return of equity if the demand is strong?

Reference no: EM132673328

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