Atlas Corporation Wishes to Estimate Its Cost of Retained Earnings

question 106

Multiple Choice

Atlas Corporation wishes to estimate its cost of retained earnings.The firm's beta is 1.3.The rate on 6-month T-bills is 2%,and the return on the S&P 500 index is 15%.What is the appropriate cost for retained earnings in determining the firm's cost of capital?

• A) 17.0%
• B) 19.5%
• C) 18.9%
• D) 22.1%

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