Answer:
In a firm financed through both debt and equity, the required return can be calculated using CAPM and WACC.
As CAPM calculates the required return on equity which is typically higher return to compensate for higher level of risk beared;compared to debt holders , while WACC calculates the overall required return for the firm, taking into account both debt and equity.
Therefore, in a firm financed through both debt and equity, CAPM is likely to give a higher return for equity as it would be more appropriate, while aiming the goal for calculating the overall required return for the firm, taking into account both debt and equity, then WACC would be the suitable method.
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