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Cost of Equity: CAPM Booher Book Stores has a beta of 1.0. The yield on a 3-month T-bill is 4.5% and the yield on a
Cost of Equity: CAPM
Booher Book Stores has a beta of 1.0. The yield on a 3-month T-bill is 4.5% and the yield on a 10-year T-bond is 6.5%. The market risk premium is 7%, and the return on an average stock in the market last year was 13.5%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.
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