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The Carole Corporations common stock has a beta of 0.90. If the risk-free rate is 2.25 percent and the market risk premium is 7.75 percent,
The Carole Corporations common stock has a beta of 0.90. If the risk-free rate is 2.25 percent and the market risk premium is 7.75 percent, what is the companys cost of equity capital? What would happen to the cost of equity if the market risk premium fell to 5.50%? What would happen to the cost of equity if Caroles beta increased to 1.25? (Use the original risk premium and risk-free rate.)
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