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    Cost of equity using CAPM equation

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    Assume that Rf = 6 percent and Km = 10 percent. Compute Kj for the following betas, using CAPM equation

    a. 0.7
    b. 1.4
    c. 1.7

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    Solution Preview

    Assume that Rf = 6 percent and Km = 10 percent. Compute Kj for the following betas, using Formula ...

    Solution Summary

    Cost of equity (Kj ) has been calculated using CAPM equation, given risk free rate and return on market portfolio.

    $2.19

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