Your firm is planning to invest in a new electrostatic power generation system. Electrostat Inc is a firm that specializ
Posted: Sun May 29, 2022 5:57 pm
Your firm is planning to invest in a new electrostatic power generation system. Electrostat Inc is a firm that specializes in this business. Electrostat has a stock price of $25 per share with 16 million shares outstanding. Electrostat's equity beta is 1.18. It also has $220 million in debt outstanding with a debt beta of 0.08. If the
risk−free
rate is 3%, and the market risk premium is 6%, then your estimate of your cost of capital for electrostatic power generators is closest to:
Question content area bottom
Part 1
A.
7.50%.
B.
7.75%.
C.
10.10%.
D.
9.50%.
Please answer. Thank you!
risk−free
rate is 3%, and the market risk premium is 6%, then your estimate of your cost of capital for electrostatic power generators is closest to:
Question content area bottom
Part 1
A.
7.50%.
B.
7.75%.
C.
10.10%.
D.
9.50%.
Please answer. Thank you!