A manager believes his firm will earn an 18 return next, Financial Management

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A manager believes his firm will earn an 18 return next

A manager believes his firm will earn an 18% return next year. His firm has a beta of 1.75, the expected return on the market is 13% and the risk free rate is 5%. Compute the return the firm should earn and determine whether it is undervalued or overvalued.

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Financial Management: A manager believes his firm will earn an 18 return next

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