Question
Vincents Dance Studio, Inc., has a beta of 1.9. The risk-free rate of interest is 4 percent. The market portfolio has an expected rate of
Vincents Dance Studio, Inc., has a beta of 1.9. The risk-free rate of interest is 4 percent. The market portfolio has an expected rate of return of 10 percent. What is the cost of internal equity, ks, for this company using the CAPM approach?
a.
13.6%
b.
15.4%
c.
17.5%
d.
14%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
13th Edition
1337395080, 9781337395083
