Your Estimate of the Market Risk Premium Is 7

question 45

Multiple Choice

Your estimate of the market risk premium is 7%.The risk-free rate of return is 4% and General Motors has a beta of 1.5.What is General Motors' cost of equity capital?

• A)13.5%
• B)14.5%
• C)13.9%
• D)14.8%

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Definitions:

Packing And Shipping Costs

Expenses associated with preparing and sending goods to customers, including materials for packing and freight charges.

Parts

Components or materials used in the manufacturing or assembly of a product, often inventoried and managed as part of the supply chain process.

Purchasing Department

A department within a business that is responsible for acquiring goods and services needed for the company’s operations.

Budgeted Costs

Budgeted costs are estimated expenses that a company plans to incur during a specific period for various activities or projects.