Compute the return firm should earn given its level of risk

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Reference no: EM131354118

A manager believes his firm will earn a 18.80 percent return next year. His firm has a beta of 1.82, the expected return on the market is 16.20 percent, and the risk-free rate is 6.20 percent.

Compute the return the firm should earn given its level of risk.

Required return %

Determine whether the manager is saying the firm is undervalued or overvalued.

Undervalued

Overvalued

Reference no: EM131354118

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