The Rhaegel Corporation's common stock has a beta of 1.4. If the risk-free rate is 5.4...

Question

Question

Answer 1

Answer #1

Cost of equity capital = Risk-free rate + Beta(Expected return on the market - Risk-free rate)

Cost of equity capital = 0.054 + 1.4(0.12 - 0.054)

Cost of equity capital = 0.1464 or 14.64%

Answer 2

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