What would be the cost of retained earnings equity for Tangshan Mining if the expected return on U.S. Treasury Bills is 5.00%, the market risk premium is 10.00 percent, and the firm's beta is 1.3?
A) 11.5%
B) 18.0%
C) 10.0%
D) 19.5%

Question

Quizplus · Accepted Answer

The cost of retained earnings equity can be calculated using the Capital Asset Pricing Model (CAPM):
Cost of Retained Earnings Equity = Risk-Free Rate + Beta*(Market Risk Premium)
= 5.00% + 1.3*(10.00%) = 18.0%

What Would Be the Cost of Retained Earnings Equity for Tangshan