Answered: The current appropriate risk-free rate…

The current appropriate risk-free rate is 6% and the return on the market is 13.5%. levered beta is 1.29. Using the CAPM, estimate DE’s cost of equity.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 15MC: Assume that Temp Force has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds)...

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I need to calculate the cost of equity with the following data:

The current appropriate risk-free rate is 6% and the return on the market is 13.5%. levered beta is 1.29. Using the CAPM, estimate DE’s cost of equity. Be sure to state any additional assumptions

Definition Definition Amount of return a company generally pays to its equity investors. The cost of equity represents the compensation required by the market in lieu of owning the asset firm and simultaneously bearing the risk of ownership.

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