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A firm has a beta of 1.2. The market return equals 10 percent and the risk-free rate of return equals 6.5 percent. The estimated cost

A firm has a beta of 1.2. The market return equals 10 percent and the risk-free rate of return equals 6.5 percent. The estimated cost of common stock equity is

A.

10.7 percent.

B.

26.3 percent.

C.

7.2 percent.

D.

14 percent.

E.

6 percent.

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