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    Cost of equity using CAPM

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    What is the cost of equity of a firm that has a beta of 1.98 and a dividend yield of 6.58%? Assume the risk free rate is 4.43% and the return last year of the S&P500 was 12.29%.

    a. 3.04%
    b. 3.23%
    c. 14.69%
    d. 17.22%

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    Solution Preview

    What is the cost of equity of a firm that has a beta of 1.98 and a dividend yield of 6.58%? Assume the risk free rate is 4.43% and the return last year of the S&P500 was 12.29%. ...

    Solution Summary

    The solution calculates Cost of equity using CAPM (Capital Asset Pricing Model) equation.

    $2.19

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