Question

Question 10 5 pts A stock has a Beta of 1.0. The risk-free rate is 5.6%, and the Market Risk Premium is estimated at 7%. The firm's cost of common equity, Re, is_ %. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process. Margin of error for correct responses: +/-.02.

Answer 1

calculation of firm's cost of common Equity 11000 By using capital Asset pricing model (CApm) for calculation of cost of common squity 2 017 r = rf + B (rm -rf) 012 where, re cost of common Equity Woo of risk-free rate a 5.6% to hahaha 22 B = stock Bela z 100 ton (rm-rf) = market risk premium = 7% 5.6 + 10 (7) -5.6+7 =19.6.6 in hims cost of common equity = 12.6%