The beta for Target Corp is .92. Assume that the risk free rate is 2.5%, and...
The beta for Target Corp is .92. Assume that the risk free rate is 2.5%, and the expected return on the market is 10%. What is the cost of common equity of Target Corp based on the Capital Asset Pricing Model?
Group of answer choices
2.5 percent
5.0 percent
8.17 percent
9.4 percent
None of the above
Homework Answers
Cost of common equity=risk free rate+beta*(market rate-risk free rate)
=2.5+0.92*(10-2.5)
which is equal to
=9.4%
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