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You have risen through the ranks of a coffee company, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick internet check shows that your company's beta is 0.62. The risk-free rate is 6.74% and you believe the market risk premium to be 5.97%. What is your best estimate of investors' expected return on your company's stock (its cost of equity capital)? The expected return is %. (Round to two decimal places.)

You have risen through the ranks of a coffee company, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick internet check shows that your company's beta is 0.62. The risk-free rate is 6.74% and you believe the market risk premium to be 5.97%. What is your best estimate of investors' expected return on your company's stock (its cost of equity capital)? The expected return is %. (Round to two decimal places.)

Essentials Of Investments
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
Section: Chapter Questions
Problem 1PS
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You have risen through the ranks of a coffee company, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick internet check shows that your company's beta is 0.62. The risk-free rate is 6.74% and you believe the market risk premium to be 5.97%. What is your best estimate of investors' expected return on your company's stock (its cost of equity capital)? The expected return is %. (Round to two decimal places.)
Transcribed Image Text:You have risen through the ranks of a coffee company, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick internet check shows that your company's beta is 0.62. The risk-free rate is 6.74% and you believe the market risk premium to be 5.97%. What is your best estimate of investors' expected return on your company's stock (its cost of equity capital)? The expected return is %. (Round to two decimal places.)
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