QUESTIONN 27:

Aluminum maker Alcoa has a beta of about 2.0, whereas Hormel Foods has a beta of 0.45. If the expected excess return of the market portfolio is 5%, which of these firms has a higher equity cost of capital, and how much higher is it?

Alcoa's equity cost of capital is _______%. (Round to two decimal places.)

Hormel's equity cost of capital is ______%. (Round to two decimal places.)

Therefore,_________ has the higher equity cost of capital by _______percentage points.(Select from the drop-down menus and round to two decimal places.)