What is it using as its equity premium estimate

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Reference no: EM131235468

The prevailing risk-free rate is 5% per annum. A competitor to your own firm, though publicly traded, has been using an overall project cost of capital of 12% per annum.

The competitor is financed by 1/3 debt and 2/3 equity. This firm has had an estimated levered beta of 1.5.

What is it using as its equity premium estimate?

Reference no: EM131235468

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