Consider the estimated beta values as of June 30, 2011, for the following companies: Coca Cola0.60 Microsoft..0.80

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Consider the estimated beta values as of June 30, 2011, for the following companies:

Coca Cola……………………………0.60

Microsoft……………………………..0.80

General Electric……………………..1.20

Alcoa Inc. ……………………………1.45

If the risk‐free rate is 4.35% and the average market return is 11.5%, estimate each company’s cost of equity capital.

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...
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