Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Based on the capital assetpricing model (CAPM), what should be Alpha's cost of retained earnings?11%17%16%12%

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Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Based on the capital a pricing model (CAPM), what should be Alpha's cost of retained earnings? 11% 17% 16% 12%

Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Based on the capital a pricing model (CAPM), what should be Alpha's cost of retained earnings? 11% 17% 16% 12%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 1hM

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Question

Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Based on the capital asset
pricing model (CAPM), what should be Alpha's cost of retained earnings?
11%
17%
16%
12%

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