Question: Return on treasury bonds 5% Return on DEF Corporate bonds 8% DEF corporation beta 1.3 DEF Corporation required risk premium above bonds 6% Market risk

Return on treasury bonds 5%

Return on DEF Corporate bonds 8%

DEF corporation beta 1.3

DEF Corporation required risk premium above bonds 6%

Market risk premium 9%

How much is the cost of the ordinary shares, using a) bond yield plus risk premium approach; b) CAPM approach?

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