CC has very recently been listed on the AIM market in London and has GBP25 million of equity and no debt. Faire pivoter vers la gauche The company has been iOSS Taking in the last few years, so it has a significant tax losses position. The risk-free rate amounts to 2%. CC does not have a long listing history, so the calculation of its beta is unreliable. You observed, however, that there are 3 other software development companies listed on AIM with betas of 2, 1.0 and 1.6. The market return is 12%. a) b) Calculate the firm's cost of equity and show your workings (8 marks) Explain/define the concept of market risk premium and discuss the its limitations/issues related to application (12 marks)