- The Capital Asset Pricing Model (CAPM)
Calculate the Cost of Equity Capital (CARM)
This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!
The two companies I need to do this question for are JC Penny (JCP) and Sears (SHLD). Calculate the Cost of Equity Capital according to the Capital Asset Pricing Model (CAPM) formula.
For the CAPM, you can find the company's beta at finance.google.com. Use 10% as the expected return on the market portfolio.
© BrainMass Inc. brainmass.com June 3, 2020, 10:48 pm ad1c9bdddf
http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml and use the rate on the 30-year Treasury bond as the risk free rate of return.
This response calculates the Cost of Equity Capital according to the Capital Asset Pricing Model formula.