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You are opening a landscaping business, and wish to estimate your levered cost of equity. Beatrice's Yard Maintenance has an equity beta of 1.8, and
You are opening a landscaping business, and wish to estimate your levered cost of equity. Beatrice's Yard Maintenance has an equity beta of 1.8, and a D/E ration of 0.6. If the riskless rate is 0.05, the expected return on the S&P500 is 0.09, and your firm will have a D/E ratio of 1, what would your firm's levered cost of equity be if the tax rate is 0.27? Please give your answer in the form of a decimal to 2 places - if your answer is 10.5%, please enter 0.105.
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