The Graber Corporations common stock has a beta of 13 If the

The Graber Corporation’s common stock has a beta of 1.3. If the risk-free rate is 4.4 percent and the expected return on the market is 10 percent, what is the company’s cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Solution

cost of equity capital=risk-free rate +Beta*(MArket rate- risk-free rate )

=4.4+1.3*(10-4.4)

which is equal to

=11.68%