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Task 9: Estimate the Sustainable Growth Rate Estimate the sustainable growth rate as at the end of the fourth

year, based on the following assumptions: • The sustainable profit margin is estimated to be equal to that estimated for the fourth year, based on the fourth year Net Income and Sales. • The sustainable asset turnover is estimated to be equal to that estimated for the fourth year, based on fourth year end Total Assets and Sales. • Assume a target Leverage Ratio as being equal to 150%. • Assume a target Retention Ratio as being equal to 50%.

Task 10: Estimate a required return based on CAPM Estimate the required return based on CAPM, based on the following assumptions: • Assume the Risk Free Rate equals 1.0% • Assume Beta equals 2.0 • Assume a Risk Premium of 4.0%

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