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 0.5. The risk-free rate is 5.5% and you believe the market risk premium to be 4.9%. 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 0.5. The risk-free rate is 5.5% and you believe the market risk premium to be 4.9%. 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 0.5. The risk-free rate is 5.5% and you believe the market risk premium to be 4.9%. 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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