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Assuming that T-bills are traded at 2.8% and S&P500 30-year average growth rate is 6%, what is the cost of equity for a firm with

Assuming that T-bills are traded at 2.8% and S&P500 30-year average growth rate is 6%, what is the cost of equity for a firm with a beta = 1.25?

Answer choices:

  • 6.8%
  • 7.7%
  • 10.8%
  • 9.6%

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