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If the historical return over the past 30 years of the S&P 500 Index is 8% and the risk-free rate (as measured by the 30-Year
If the historical return over the past 30 years of the S&P 500 Index is 8% and the risk-free rate (as measured by the 30-Year Treasury Bond) is 3%, what is the equity cost of capital for Summa Corp? If Summas long-term debt trades at Treasuries plus 1.25% what is Summas WACC? What two factors are the biggest determinants of equity cost? How would you explain these factors to a non-finance person? (Equity Beta is 1.47)
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