Assume that a company has a beta of 0.78 and the risk-free rate is 5%. If the market risk premium is 7% calculate the cost of equity capital, using the capital asset pricing model: A. 10.5%. B. 5.3%. C. 11.2%. D. 6.0%.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Assume that a company has a beta of 0.78 and the
risk-free rate is 5%. If the market risk premium is 7%
calculate the cost of equity capital, using the capital
asset pricing model:
A. 10.5%.
B. 5.3%.
C. 11.2%.
D. 6.0%.
Transcribed Image Text:Assume that a company has a beta of 0.78 and the risk-free rate is 5%. If the market risk premium is 7% calculate the cost of equity capital, using the capital asset pricing model: A. 10.5%. B. 5.3%. C. 11.2%. D. 6.0%.
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