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10 December, 06:21

The Up and Coming Corporation's common stock has a beta of 0.92. If the risk-free rate is 0.01 and the expected return on the market is 0.06, what is the company's cost of equity capital?

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  1. 10 December, 08:52
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    The company's cost of equity capital is 0.056

    Explanation:

    cost of equity capital

    = risk free rate + beta * (expected return on market - risk free rate)

    = 0.01 + 0.92 * (0.06 - 0.01)

    = 0.056

    Therefore, The company's cost of equity capital is 0.056
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