According to Value Line , Bestway has a beta of 1.15. If 3-month Treasury bills currently yield 7.9 percent and the market risk premium is estimated to be 8.3 percent, what is Bestway's cost of retained earnings?

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Quizplus · Accepted Answer

Bestway's cost of retained earnings can be calculated using the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium = 7.9% + 1.15 * 8.3% = 17.445%, which rounds to 17.45%.

According to Value Line , Bestway Has a Beta of 1.15