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Company Z has the following optimal capital structure: The risk-free rate is 10% and the market risk premium is 8%. Their tax rate is 28%
Company Z has the following optimal capital structure: The risk-free rate is 10% and the market risk premium is 8%. Their tax rate is 28% and their beta is 1,3. Investors expect earnings and dividends to grow at a constant rate of 8%. REQUIRED: Determine the cost of ordinary shares for company Z, using the CAPM approach.
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