Question
How to calculate cost of equity from the following: Risk-free interest rate: 2.0% Cost of debt: 4.0% Corporate tax rate: 25% Market risk premium: 6.0%
How to calculate cost of equity from the following:
| Risk-free interest rate: | 2.0% |
| Cost of debt: | 4.0% |
| Corporate tax rate: | 25% |
| Market risk premium: | 6.0% |
| Beta (β) of the equity: | 0.9 |
Fraction of total financing coming from debt (D/(D+E)): 30%
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
The cost of equity can be calculated using the Capital Asset Pricing Model CAPM as follows Cost of E...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
