I did exam 2 morning section yesterday, and I don’t understand the answer of question 14. The answer key uses 8% as the require return rate, but the required return rate for question 13 is 7.2%. why do we have to use 8% for question 14?

Did you check the errata?

I think it’s in the errata, I’m at work I remember that question, I think they forgot to include the 8% in the question.

thank you very much! I thought i was that dump!

Here is the Errata: Exam 2 Page: 84, Question 14 - Omission For Question 14, we inadvertently left out the following sentence: “Assume for this question that De Jong has changed her estimate of the expected return on the market so that the required return on equity changes to 8%.” Posted: 2008-03-30