TJ Co stock has a beta of 1.60, the current risk-free rate is 5.90 percent, and the expected return on the market is 14.15 percent. What is TJ Co's cost of equity?
19.10%
28.54%
32.08%
21.65%
A. 19.10%
TJ Co's cost of equity = Risk-free rate + Beta(Expected return on the market - Risk-free rate)
TJ Co's cost of equity = 0.0590 + 1.60(0.1415 - 0.0590)
TJ Co's cost of equity = 0.1910 or 19.10%
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