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Problem 9-6 Cost of Equity: CAPM Booher Book Stores has a beta of 0.4. The yield on a 3-month T-bill is 4% and the yield

Problem 9-6

Cost of Equity: CAPM

Booher Book Stores has a beta of 0.4. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 8%. The market risk premium is 7%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.

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