Darryl's Doughnuts has a Beta of 1.4 at a time when the expected market return is...

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business finance

Answer 1

Answer #1

According to CAPM

required rate of return = cost of equity capital = Rf + beta*(Rm-Rf)

Rm = 9.3%, Rf = 2.9%, beta = 1.4

cost of equity capital = 2.9% + 1.4*(9.3%-2.9%) = 11.86%

Answer : 11.86% (Thumbs up please)

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Answer 2

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