Steady Company's stock has a beta of 0.16 If the risk free rate is 5.9 %...
Steady Company's stock has a beta of 0.16 If the risk free rate is 5.9 % and the market risk premium is 6.9 % what is an estimate of Steady Company's cost of equity?
Steady's cost of equity capital is --------- %.(Round to one decimal place.)
Homework Answers
SOLUTION :
Cost of equity, r , as per CAPM model :
= rF + b * rP
= 5.9 + 0.16 * 9
= 7.34 %
= 7.3% approx.
Cost of equity is = 7.3% (ANSWER)
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