Horizon Tech Ltd. has a beta of 1.1. The yield on a 3-month T-bill is 4.8%, and the yield on a 10-year T-bond is 6.5%. The market risk premium is 6.2%, and the return on an average stock in the market last year was 18%. What is the estimated cost of common equity using the CAPM model? a. 11.32% b. 12.50% c. 13.32% d. None of the above

Horizon Tech Ltd. has a beta of 1.1. The yield on a 3-month T-bill is 4.8%, and the yield on a 10-year T-bond is 6.5%. The market risk premium is 6.2%, and the return on an average stock in the market last year was 18%. What is the estimated cost of common equity using the CAPM model? a. 11.32% b. 12.50% c. 13.32% d. None of the above

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 6P

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