Question
Find your Apple Inc. beta from a credible source. o You can get this information from the Mergent database or by looking it up on
Find your Apple Inc. beta from a credible source.
oYou can get this information from the Mergent database or by looking it up on a financial website likeYahoo! Finance(Links to an external site.).https://finance.yahoo.com/quote/AAPL/key-statistics/
Compare your company's beta to the market beta of 1.0.
Calculate thecompany-specificrequired rate of return using the CAPMformula.
oShow all calculations.
oUse the beta you determined for your chosen company
oUse a risk-free rate of 2.0%.
oFor the market risk premium, use the following assumptions:
For a large capitalization company (greater than $10.0 billion in marketcapitalization) use 6.0% as the market risk premium.
For a mid-cap company (between $2.0 billion and $10.0 billion in market capitalization) use 8.0% as the market risk premium.
For a small-cap company (less than $2.0 billion in market capitalization) use 11.0% as the market risk premium.
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