Zycor Corporation obtains most of its funding internally. Assume that the stock has a beta of 1.2,

Question:

Zycor obtains most of its funding internally. Assume that the stock has a beta of 1.2, the riskless rate is 6.5%, and the market risk premium is 6%.
a. Estimate the cost of internal equity.
b. Now assume that the cost of issuing new stock is 5% of the proceeds. Estimate the cost of external equity.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...