Question: You are using the CAPM to find the appropriate cost of equity for a new project that pays off a year from now. Given the

You are using the CAPM to find the appropriate cost of equity for a new project that pays off a year from now. Given the following information, calculate the required rate of return on equity using the CAPM. 30-day T-Bill: 1.2% 1-year Treasury Bond: 3.1% Market Risk Premium: 4% Covariance(Return on Company Stock, Return on S&P 500): 4 Variance(Return on S&P 500): 2.5 (Reminder - this is a rate question, so be careful.)

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