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Problem:

Suppose you must estimate the cost of equity for a firm, and you have the following data: rRF = 5.0%; rM rRF = 4%; b = 0.9; D1 = $2.00; P0 = $50.00; g = 5%; and rd = the firm's bond yield = 5.8%.

Required:

Question: What is this firm's cost of equity using the CAPM approach?

8.6%
7.5%
8.8%
8.2%
9.0%

Note: Provide thorough explanation of every question given in the problem.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91174676

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