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zzz [600]
1 year ago
14

scanlon inc.'s cfo hired you as a consultant to help her estimate the cost of capital. you have been provided with the following

data: r rf
Business
1 answer:
sp2606 [1]1 year ago
3 0

The cost of equity is 10.6%.

<h3>What is the explanation?</h3>

The calculation of the question is shown as follows:

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

Cost of equity = 3.25% + (1.4* 5.25%)

Which is equal to 3.25% + (7.35%)

hence cost of equity is 10.6%.

<h3>What are retained earnings?</h3>

Retained earnings refer to the total amount of earnings that a company generates from its operations. This subtracts the dividends shared among stockholders. The retained earnings are then reinvested in business.

To know more about retained earnings, visit:

brainly.com/question/13980094

#SPJ4

The complete question is:

Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: r_RF = 3.25%; R_PM = 5.25%; and b = 1.40.

Based on the CAPM approach, what is the cost of equity from retained earnings?

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