1 the common stock of modern interiors has a beta of 206, Ask an Expert

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1. The common stock of Modern Interiors has a beta of 2.06. The market rate of return is 10.5 percent and the risk-free rate is 2.4 percent. What is the cost of equity for this firm, according to the CAPM? Input your answer as a decimal rounded to four places.

2. Catnip Stores has a $20 million bond issue outstanding that currently has a market value of $21 million. The bonds pay semiannual coupons, have a coupon rate of 7.4% and a yield to maturity of 8.81%. The tax rate is 32.1%. What is the firm's pre-tax cost of debt? Input your answer as a decimal rounded to four decimal places.

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Financial Management, Finance

Category:- Financial Management
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