The competitor is financed by 13 debt and 23 equity this, Financial Management

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The competitor is financed by 13 debt and 23 equity this

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?

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