1 answer

The Lenzie Corporation’s common stock has a beta of 1.90. If the risk-free rate is 5.9%...

Question:

The Lenzie Corporation’s common stock has a beta of 1.90. If the risk-free rate is 5.9% and the expected return on the market is 13%, what is the company’s cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.)

Cost of equity capital


Answers

Cost of equity=risk free rate+beta*(market rate-risk free rate)

=5.9+1.9*(13-5.9)

which is equal to

=19.39%

.

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