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Weighted average required return on investment

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The Sprouts-N-Steel Company employs Debt equal to 30 percent and preferred stock equal to 10 percent of its fund requirements, with equity capital used for the reminder. The current borrowing rate is 15 percent, and the company's tax rate is 40 percent. At present, preferred stock can be sold yielding 13 percent. The companies with same capital structure in the market are using a value for Beta of 0.90. The risk-free rate is currently 12 percent and the expected return on the market portfolio 17 percent. What weighted average required return on investment would you recommend for this company?

Reference no: EM133109965

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