What market risk premium should be used

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Reference no: EM131337173

1. Describe how to derive the break points in the marginal cost of capital schedule.

2. Discuss the pros and cons of various sources of estimates of future earnings and dividend growth rates for a company.

3. What market risk premium should be used when applying the CAPM to compute the cost of equity capital for a firm if

a. the risk-free rate is the 90-day Treasury bill rate?

b. the risk-free rate is the 20-year government bond rate?

Reference no: EM131337173

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