What rate of return is he expecting

Reference no: EM13304608

ABC AG and XYZ AG are identical firms in all respects except for their capital structure. ABC is all equity financed with NKr324,000 in equity shares. XYZ uses both shares and perpetual debt; its equity is worth NKr162,000 and the interest rate on its debt is 9 per cent. Both firms expect EBIT to be NKr72,000. Ignore taxes.

Requirement 1:

Knut owns NKr27,000 worth of XYZ's shares. What rate of return is he expecting? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Reference no: EM13304608

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