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The common stock of Silent Motors has a beta that is 5 percent greater than the overall market beta. Currently, the market ri
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Answer #1

Market beta = 1

Beta of stock = 1 × (1+0.05)

= 1 × 1.05 = 1.05

Cost of equity = risk free rate + beta (market risk premium)

= 2.8% + 1.05 (8.25%)

= 2.8% + 8.694%

= 11.494%

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