A firm has a beta of 1.2. The market return equals 14 percent and the risk-free...

A firm has a beta of 1.2. The market return equals 14 percent and the risk-free rate of return equals 6 percent. What is the estimated cost of common stock equity?

Expert Solution

Cost of common stock equity =

Risk free rate + ( Market return- risk free rate )* Beta

=6+(14-6)*1.2

=15.6%

jeff jeffy answered 2 years ago

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