Accounting question The market risk premium is estimated at 5%. The risk-free rate is 3.5%, and Tesla has a beta of 1.8. What isTesla's cost of equity capital?A) 11.5%B) 12.5%C) 13.7%D) 12.0%

Tesla's cost of equity capital can be calculated using the Capital Asset Pricing Model (CAPM)…

Answered: The market risk premium is estimated at…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The market risk premium is estimated at 5%. The risk- free rate is 3.5%, and Tesla has a beta of 1.8. What is Tesla's cost of equity capital? A) 11.5% B) 12.5% C) 13.7% D) 12.0%