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14 May, 08:32

Question 1: Assuming that the riskless rate is 2.3% and the market premium is 5.3%, calculate Zonk's cost of equity capital: A. 10.4% B. 7.69% C. 11.89% D. 8.28%

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  1. 14 May, 08:45
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    D. 8.28%

    Explanation:

    Cost of equity capital = risk free rate + (beta*market premium)

    = 2.3% + (1.13*5.3%)

    = 8.28%

    Therefore, Zonk's cost of equity capital is 8.28%
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