So I understand what they are doing on this question…but what gets me is we need to use a formula from MM Proposition II (w/tax) to arrive at the cost of equity.
I don’t see an LOS for MM Proposition anything that says “calculate”.
Am I missing something?
I just assumed you needed to know the formula and memorized it.
Yeah, me too…I noted it. But come on
I’m just memorizing stuff like this in case it comes up. Same goes for Treynor Black and Market Model equations. They don’t say to calculate but to answer a question you really need to know the formula in order to understand the concept.
thats a fair point
Just use the plain old WACC formula and reverse engineer it.