Kello Inc. needs to calculate its current cost of equity, and the following information has been obtained: The current unlevered cost of equity is 9%. The current cost of debt is 5%. The income tax rate is 22%. The company has 500,000 common shares outstanding with a current market value of $30 per share and a book value of $25 per share. The company has current debt outstanding with a market value of $8,000,000 and a book value of $7,800,000. 

What is Kello's current cost of equity?  

Answer rating: 100% (QA)

To calculate Kellos current cost of equity we need to use the capital asset pricing model CAPM formu... View the full answer