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    Cost of common equity using CAPM - Booher Book Stores

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    Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM?

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    Solution Summary

    This post shows how to calcualte the estimated cost of common equity using CAPM.