Register
The Up and Coming Corporation's common stock has a beta of 0.92. If the risk-free rate is 0.01 and the expected return on the market is 0.06, what is the company's cost of equity capital?
170k views
2 votes
The Up and Coming Corporation's common stock has a beta of 0.92. If the risk-free rate is 0.01 and the expected return on the market is 0.06, what is the company's cost of equity capital?

User Bez Hermoso
by
6.2k points

1 Answer

6 votes

Answer:

The company's cost of equity capital is 0.056

Step-by-step explanation:

cost of equity capital

= risk free rate + beta*(expected return on market - risk free rate)

= 0.01 + 0.92*(0.06 - 0.01)

= 0.056

Therefore, The company's cost of equity capital is 0.056

User Kellie
by
6.7k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

6.5m questions

8.6m answers

Other Questions

One reason that businesses want to combine with other businesses is to A. avoid taxes. B. delay expenses. C. hire more workers. D. reduce expenses.
Which of the following is an example of a fixed expense? A.) Clothing B.) Rent C.) Food D.) Entertainment
A ______ is "the basic interpretive mechanism to let people know what an organization is doing and are sent out to editors and reporters in hopes of stimulating favorable stories about their organizations"
All of the following are fees typically charged by credit card companies EXCEPT: A. Late payment fee B. Balance Transfer fee C. Annual membership fee D. Reload fee
Individuals are free to produce and sell whatever products they wish
Link Copied!