The cost of capital of MSFT stock. Introduction: The cost of capital is the WACC (Weighted Average Cost of Capital) is the total rate of return for a company which anticipates reimbursing all their investors. It is considered as a financing resource in the target capital structure of a company and it measured in terms of weights of fractions.

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Chapter 13, Problem 28P

a)

Summary Introduction

To determine: The cost of capital of MSFT stock.

Introduction:

The cost of capital is the WACC (Weighted Average Cost of Capital) is the total rate of return for a company which anticipates reimbursing all their investors. It is considered as a financing resource in the target capital structure of a company and it measured in terms of weights of fractions.

b)

Summary Introduction

To determine: The cost of capital of MSFT stock using CAPM.

Introduction:

CAPM is abbreviated as Capital Asset Pricing Model. Expected Return is the method of finding the average anticipated probability of several diverse interest rates that are probable on a particular asset.

The issues in such persistence comprise of dissimilar market environments which also includes the beta of an asset. Beta is the risk related with a portfolio or a security in connection to the market. It is also termed as the beta coefficient; it is a method for deciding on the requirement on security or stock that may move in contrast with the market.

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