Financial accounting 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%

To determine Tesla's cost of equity capital, we apply the Capital Asset Pricing Model (CAPM), which…

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 current risk-free rate of return is 4.6%. The market risk premium is 6.6%. D'Amico Co. has a beta of 1.56. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is ... .··. ··· .... .··. .··...
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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%