As per Capital Asset Pricing Model, | |||||||
Cost of equity Capital | = | Risk free rate | + | Beta | * | market risk premium | |
= | 6.2% | + | 0.21 | * | 6.9% | ||
= | 7.6% |
SOLUTION :
Cost of equity, r , as per CAPM model :
= rF + b * rP
= 6.2 + 0.21 * 6.9
= 7.649 %
= 7.6% approx.
Cost of equity is = 7.6% (ANSWER)
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