Use the following information to answer the question(s)below. The risk-free rate of interest is 3% and the market risk premium is 5%.
-The value of the gas and convenience store division is closest to:
A)$4500
B)$6000
C)$8600
D)$15,000

Question

Use the following information to answer the question(s)below.  The risk-free rate of interest is 3% and the market risk premium is 5%.
-The value of the gas and convenience store division is closest to:
A)$4500 
B)$6000 
C)$8600 
D)$15,000

Quizplus · Accepted Answer

D)r_i = r_rf + β(r_m - r_rf)= .03 + 0.8(.05)= .07 or 7.0% V = 11ea7cce_3d17_84cc_928c_afa893bef1a5_TB1626_11 = 11ea7cce_3d17_84cd_928c_138514cec421_TB1626_11 = $15,000

Use the Following Information to Answer the Question(s)below