Hampton Corporation has a beta of 1.63 and a marginal tax rate of 34%. The expected return on the market is 12% and the risk-free interest rate is 2.50%. Estimate the firm's cost of internal equity. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. IF YOUR ANSWER IS 7.7000%, FOR EXAMPLE, ENTER 7.70.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Hampton Corporation has a beta of 1.63 and a marginal tax rate of 34%. The expected return
on the market is 12% and the risk-free interest rate is 2.50%. Estimate the firm's cost of internal
equity. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO 2 DECIMAL
PLACES AT THE END. DO NOT ENTER THE % SIGN. IF YOUR ANSWER IS 7.7000%, FOR
EXAMPLE, ENTER 7.70.
Transcribed Image Text:Hampton Corporation has a beta of 1.63 and a marginal tax rate of 34%. The expected return on the market is 12% and the risk-free interest rate is 2.50%. Estimate the firm's cost of internal equity. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. IF YOUR ANSWER IS 7.7000%, FOR EXAMPLE, ENTER 7.70.
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