Mathematics · Cost of Capital - CAPM Formula
If the risk-free rate of return is 10%, the company's beta is 1.75, and the expected return on the market portfolio is 13.5%, calculate the cost of equity using the Capital Asset Pricing Model (CAPM): Cost of Equity = Rf + β(Rm - Rf)
- 118.125%
- 216.125%✓
- 314.125%
- 412.125%
Correct answer
16.125%
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