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Using the following information, calculate the cost of capital using the capital asset pricing model: Risk-free rate = 2.80% Beta = 1.5 Equity risk premium

Using the following information, calculate the cost of capital using the capital asset pricing model: Risk-free rate = 2.80% Beta = 1.5 Equity risk premium = 7.00% Size premium = 5.70% Specific company risk = 6.00% Combined federal and state tax rate = 35% Effective tax rate = 30% Debt as a % of total capital = 40% Interest rate on debt = 6.50%

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