What is XYZs estimated cost of common equity using the CAPM

What is XYZ’s estimated cost of common equity using the CAPM approach? Please show work in Excel.

3. (12.5 Points) What is XYZ\'s estimated cost of common equity using the CAPM approach? 1.2 7% 6% TBE RPM Estimated Cost of Common Equity

Solution

Estimated cost of common equity = Risk free rate+beta*market premium

   = 7%+1.2*(7-6)

Estimated cost of common equity = 8.20%