Homework SourseThe riskfree rate in the US is currently 2 and the expected
The risk-free rate in the U.S. is currently 2% and the expected U.S. market return is 10%. Solso, Inc. is considering a project that has a beta of 1.2. What is the cost of dollar-denominated equity??
10.1%
11.4%
none of the options listed
2.15
8.3%
The risk-free rate in the U.S. is currently 2% and the expected U.S. market return is 10%. Solso, Inc. is considering a project that has a beta of 1.2. What is the cost of dollar-denominated equity??
10.1%
11.4%
none of the options listed
2.15
8.3%
The risk-free rate in the U.S. is currently 2% and the expected U.S. market return is 10%. Solso, Inc. is considering a project that has a beta of 1.2. What is the cost of dollar-denominated equity??
10.1%
11.4%
none of the options listed
2.15
8.3%
Solution
The cost of dollar-denominated equity = risk-free rate + beta *( market return- risk free rate)
= 2% + 1.2 (10% - 2%)
= 2% + 9.6%
= 11.6%
So, none of the options listed.
