Use the following information to answer the question(s) below

Assume that the risk-free rate of interest is 3% and you estimate the market's expected return to be 9%.
-The equity cost of capital for "Miney" is closest to:
A)6.30%.
B)7.50%.
C)9.30%.
D)9.75%.

Question

Use the following information to answer the question(s) below

Assume that the risk-free rate of interest is 3% and you estimate the market's expected return to be 9%.
-The equity cost of capital for "Miney" is closest to:
A)6.30%. 
B)7.50%. 
C)9.30%. 
D)9.75%.

Quizplus · Accepted Answer

The equity cost of capital is typically calculated using models like the Capital Asset Pricing Model (CAPM). Without specific data, we assume the most common range for equity cost of capital, which is often around 9-10% for many companies, making 9.30% a reasonable estimate.

Use the Following Information to Answer the Question(s) Below