Required Rate of Return on Equity Calculating the required rate of return on equity Total firm value=o/k =$1,350 /.15 =$9,000 Market value =V-B $93000-$1,800 of equity =$7,200 Interest payments =$1,800*10% Required return =E/S on equity =(51,350-$180)/$7200 =16.25% 17-9 *B/S=$1,800/$7,200=2517-9 Required Rate of Return on Equity Total firm value= O / ko = $1,350 / .15 = $9,000 Market value = V - B = $9,000 - $1,800 of equity = $7,200 Required return = E / S on equity* = ($1,350 - $180) / $7,200 = 16.25% Calculating the required rate of return on equity * B / S = $1,800 / $7,200 = .25 Interest payments = $1,800 * 10%