Aluminum maker Alcoa has a beta of about 1.83, whereas Hormel Foods has a beta of...

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Aluminum maker Alcoa has a beta of about 1.83, whereas Hormel Foods has a beta of 0.31. If the expected excess return of the market portfolio is 5%, which of these firms has a higher equity cost of capital, and how much higher is it? Alcoa's equity cost of capital is %. (Round to two decimal places.) Hormel's equity cost of capital is %. (Round to two decimal places.) Therefore, has the higher equity cost of capital by percentage points. (Select from the drop-down menus and round to two decimal places.) Aluminum maker Alcoa has a beta of about 1.83, whereas Hormel Foods has a beta of 0.31. If the expected excess return of the market portfolio is 5%, which of these firms has a higher equity cost of capital, and how much higher is it? Alcoa's equity cost of capital is %. (Round to two decimal places.) Hormel's equity cost of capital is %. (Round to two decimal places.) Therefore, has the higher equity cost of capital by percentage points. (Select from the drop-down menus and round to two decimal places.)

Answer rating: 100% (QA)

Answer To calculate the equity cost of capital also known as the required rate of return we can use ... View the full answer