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The current risk-free rate of return ( rRF ) is 4.67% while the market risk premium is 6.63%. The Burris Company has a beta of 0.78. Using the capital asset pricing model (CAPM) approach, Burris’s cost of equity is

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Ritmeks

Answer:

9.84%

Explanation:

The current risk free rate of return is 4.67%

The market risk premium is 6.63%

Burris company has a beta of 0.78

Therefore, using the capital assets pricing model the cost of equity can be calculated as follows

Cost of equity= Risk free rate+ Beta×Market risk premium

= 4.67%+0.78×6.63%

= 4.67%+5.171

= 9.84%

Hence Burris's cost of equity is 9.84%

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