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You are estimating a cost of capital for startup A, which is all equity-financed. You identify 3 comparable companies, and their equity beta, market cap,
You are estimating a cost of capital for startup A, which is all equity-financed. You identify 3 comparable companies, and their equity beta, market cap, and enterprise values are as follows. Comp 1 Comp 2 Comp 3 Equity Beta 1.3 1.7 1.25 Market cap of equity 370 611 440 Enterprise value 315 578 510 If the risk-free rate is 2% and market premium is 6%, and you assume net debt of zero for startup A, what is your estimate for the cost of capital for startup A based on the three comparables? O 11.6% O 7.9% O 10.8% 10.5%
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