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    Cost of equity capital

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    The Allegheny Valley Power Company common stock has a beta of 0.80. If the current risk-free rate is 6.5%(Krf)and the expected return on the common stock as a whole is 16%(Km),determine the cost of equity capital (Ke)for the firm (using the CAPM).

    The answers to this problem are one of the following:
    a. 14.1%
    b. 7.6%
    c. 6.5%
    d. none of the above

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    https://brainmass.com/business/business-math/cost-of-equity-capital-31492

    Solution Preview

    Financial Management Problem: Determining the cost of equity capital for a firm using the CAPM.

    The Allegheny Valley Power Company common ...

    Solution Summary

    This shows how to determine the cost of equity capital (using the CAPM).

    $2.49

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