A firm has 10,000 shares outstanding, and the price of the stock is $50/share. If the...
A firm has 10,000 shares outstanding, and the price of the stock is $50/share. If the beta is 1.4 and risk-free rate is 4%, what would be the cost of equity if expected market return is 10% and tax is 30%?
Homework Answers
Cost of equity is calculated using the CAPM:-
=Rf rate+beta*(market return-rf rate)
=4%+1.4*(10%-4%)
=12.40%
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