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27 September, 00:03

Steady Company's stock has a beta of 0.18. If the risk-free rate is 6.1 % and the market risk premium is 6.9 % , what is an estimate of Steady Company's cost of equity? g

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  1. 27 September, 00:19
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    Steady Company's cost of equity is estimated to be 7.342%

    Explanation:

    The cost of equity is the return that is required by the holders of common stock in the company.

    Cost of Equity = Return on Risk free Securities + Beta * Risk Premium

    = 6.1 % + 0.18 * 6.9 %

    = 7.342%

    Therefore, Steady Company's cost of equity is estimated to be 7.342%.
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