A firm has a beta of 1.2. The market return equals 14 percent and the risk-free rate of return equals 6 percent. The estimated cost of common stock equity is
A. 6 percent.
B. 7.2 percent.
C. 14 percent.
D. 15.6 percent.
Answer:D
A firm has a beta of 1.2. The market return equals 14 percent and the risk-free rate of return equals 6 percent. The estimated cost of common stock equity is
A. 6 percent. B. 7.2 percent. C. 14 percent. D. 15.6 percent.