What market risk premium should be used when applying the CAPM to compute the cost of equity capital for a firm if a The risk free rate is the 90 day Treasury bill rate b The risk free rate is the 20 year government bond rate ...

a When the riskfree rate is the 90day Treasury bill ...

What market risk premium should be used when applying the CAPM to compute the cost of equity

Question:

What market risk premium should be used when applying the CAPM to compute the capital for a firm if?
a. The risk-free rate is the 90-day Treasury bill rate?
b. The risk-free rate is the 20-year government bond rate?

Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...