P14-2 Calculating Cost of Equity [LO1] The Up and Coming Corporation\'s common s

Question

P14-2 Calculating Cost of Equity [LO1]

The Up and Coming Corporation's common stock has a beta of 1.05. If the risk-free rate is 5.3 percent and the expected return on the market is 12 percent, Up and Coming's cost of equity is percent.(Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

The Up and Coming Corporation's common stock has a beta of 1.05. If the risk-free rate is 5.3 percent and the expected return on the market is 12 percent, Up and Coming's cost of equity is percent.(Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Hi,

Please find the answer as follows:

Cost of Equity = Rf + B*(Rm - Rf) = 5.3 + 1.05*(12 - 5.3) = 12.34%

Answer is 12.34%.

Thanks.

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