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3 pts Question 7 Williams beta is 1.2, the yield on T-bonds is 7%, and the market risk premium is estimated to be at 7%. What
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Answer #1

Given,

Beta = 1.2

Yield on T-bonds = 7%

Market risk premium = 7%

Solution :-

Estimated cost of common equity

= Yield on T-bonds + (beta x market risk premium)

= 7% + (1.2 x 7%)

= 7% + 8.4%

= 15.4%

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