Toronto Skaters Company is an all-equity company and is able to fund a $1 million investment using cash.The company has a beta of 1.4, the risk-free rate is 3%, and the return on the market is 8%.Flotation costs for new equity are 3%.Ignore income taxes for this question.The appropriate cost of capital is:

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The appropriate cost of capital is the required return on the outstanding equity, which can be calculated using the Capital Asset Pricing Model (CAPM). The CAPM formula is: Cost of Equity = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Given the beta of 1.4, a risk-free rate of 3%, and a market return of 8%, the cost of equity can be calculated, and it represents the opportunity cost of using cash for the investment instead of returning it to shareholders or investing it elsewhere.

Toronto Skaters Company Is an All-Equity Company and Is Able