MM Ferguson's market value of common stock is $35.4 million, and its risk-free debt is $13.1 million in market value. The beta of the company's common stock is 1.55, and the market return is 10.2 percent. If the Treasury bill rate is 1.7 percent, what is the company's cost of capital? (Ignore taxes) A. 10.66% B. 11.32% C. 12.49% D. 13.31% E. 13.92%
MM Ferguson's market value of common stock is $35.4 million, and its risk-free debt is $13.1 million in market value. The beta of the company's common stock is 1.55, and the market return is 10.2 percent. If the Treasury bill rate is 1.7 percent, what is the company's cost of capital? (Ignore taxes) A. 10.66% B. 11.32% C. 12.49% D. 13.31% E. 13.92%
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 7P
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