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CAPM Approach to Earnings Retained

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Assume that you are a consultant to Magee Inc. and you have been provided with the following data: rRF = 4%, RPM = 5% and b= 1.15. What is the cost of quity from retained earnings based on the CAPM approach?

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Solution Summary

The solution examines CAPM's approach to earnings retained. The cost of quity is determined.

$2.19