Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity...
Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity financing for his company. The stock has a beta of 2.02. Paul estimated that the market return is 6.20%. The current rate for 10-year Treasury Bonds is 3.62%. Calculate cost of common equity financing using CAPM – SML formula.
Round the answers to two decimal places in percentage form.
Homework Answers
cost of common equity financing=risk-free rate +Beta*(market rate- risk-free rate )
=3.62+2.02*(6.2-3.62)
which is equal to
=8.83%(Approx).
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Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the
cost of equity...
Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity...
Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity financing for his company. The stock has a beta of 2.17. Paul estimated that the market return is 9.90%. The current rate for 10-year Treasury Bonds is 2.05%. Calculate cost of common equity financing using CAPM – SML formula.
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