Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You

Question:

Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.15. Based on the CAPM approach, what is the cost of equity from retained earnings?

1. 7.60%

2. 8.62%

3. 10.14%

4. 12.27%

5. 12.67%

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...