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Greshak Corp. is attempting to estimate the cost of its common equity. Research indicates that the current risk free rate (based on U.S. Treasury securities)
Greshak Corp. is attempting to estimate the cost of its common equity. Research indicates that the current risk free rate (based on U.S. Treasury securities) is 2.50%, Greshak's beta is .90, the expected return on the equity market next year is 9%, and the current equity risk premium is 7.5%. Based on this information, what is the estimated cost of Greshak's equity? You must show ALL work (including calculator keystrokes) to receive credit. Use at least 4 decimal places in your work and answer (1.55% = .0155).
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