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    Beta and Cost of Equity Capital

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    Calculate the beta and the cost of equity capital. The following historical data for a proxy firm is similar to the firm evaluated in the final project assignment.

    Year Market Rate of Return Firm Rate of Return
    20X0 25% 15%
    20X1 10% 6%
    20X2 15% 9%
    20X3 20% 12%

    Using the above data calculate the beta of the firm.
    If the risk-free rate is 4%, and the market rate of return is 14%, calculate the required rate of return (cost of equity) for the stock using CAPM.

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    https://brainmass.com/business/capital-asset-pricing-model/beta-and-cost-of-equity-capital-209874

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    calculate the beta and the cost of equity capital. The following historical data for a proxy firm is similar to the firm evaluated in the final project assignment.

    Year     Market Rate of Return       Firm Rate of Return
    20X0            25%                          15%  
    20X1            10%                           6%
    20X2            15%                           9%
    20X3            20%                          12%

    Using the above data calculate the beta of the firm.
    If the risk-free ...

    Solution Summary

    Calculates Beta and Cost of Equity Capital.

    $2.19