Treasury bills currently have a return of 3.5% and the market risk premium is 8%. If a ﬁrm has a beta of 1.6, what is its cost of equity?

Name: Treasury bills currently have a return of 3.5% and the market risk premium is 8%. If a ﬁrm has a beta of 1.6, what is its cost of equity?
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The cost of equity can be calculated using the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. Here, it is 3.5% + 1.6 * 8% = 16.3%.

Treasury Bills Currently Have a Return of 3