Adams Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05. What is the firm's cost of common from reinvested earnings based on the CAPM?

Name: Adams Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05. What is the firm's cost of common from reinvested earnings based on the CAPM?
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Question

Quizplus · Accepted Answer

$\begin{array} { l r } 
r _ { R F } & 5.00 \% \
RP _ { M } & 6.00 \% \
b&1.05\
r _ { 5 } = R F + ( R P M \times b ) & 11.30\%\
\end{array}$

Adams Inc Has the Following Data: RRF = 5