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MS Corporation is undertaking a capital budgeting analysis. The firm's beta is 1.5. The rate on 10-year T-Bonds is 1.6% and the return on the

MS Corporation is undertaking a capital budgeting analysis. The firm's beta is 1.5. The rate on 10-year T-Bonds is 1.6% and the return on the S&P 500 index is 8%. What is the appropriate cost of common equity in determining the firm's cost of capital?

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