Question
Cost of Equity: CAPM Booher Book Stores has a beta of 1.3. The yield on a 3-month T-bill is 3.5% and the yield on a
Cost of Equity: CAPM
Booher Book Stores has a beta of 1.3. The yield on a 3-month T-bill is 3.5% and the yield on a 10-year T-bond is 6%. The market risk premium is 4%, and the return on an average stock in the market last year was 10%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.
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Data Analysis And Decision Making
Authors: Christian Albright, Wayne Winston, Christopher Zappe
4th Edition
538476125, 978-0538476126
