Question: Scholastic Toys is considering developing and distributing a new board game for children. The project is similar in risk to the firm's current operations. The

Scholastic Toys is considering developing and distributing a new board game for children. The project is similar in risk to the firm's current operations. The weight of equity is 40% and the company pays no dividends in order to fund its rapid growth. How should the firm determine its cost of equity?

Group of answer choices

by using the capital asset pricing model

by using WACC + something

by multiplying the market risk premium by (1 - 0.40)

by averaging the costs based on the dividend growth model and the capital asset pricing model

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