Question

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?

Answer 1

Answer:

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