Question
A firm is raising capital for a new project. Their oustanding bonds pay 14% interest annually. Investors currently pay $1124 for the 10-year bond. This
A firm is raising capital for a new project. Their oustanding bonds pay 14% interest annually. Investors currently pay $1124 for the 10-year bond. This firm plans to issue common stock. The additional risk permium on the firm's stock is 2.3%. Estimate the cost of equity capital?
Solve for the cost of equity
| None of the other choices | ||
| 4.99% | ||
| 4.21% | ||
| 6.51% | ||
| 2.69% |
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Public Finance
Authors: Harvey Rosen, Ted Gayer
10th edition
9781259716874, 78021685, 1259716872, 978-0078021688
