The Following Financial Information Is Available on Simmons Inc Determine the Cost of Retained Earnings Using the Capital Asset

question 43

Multiple Choice

The following financial information is available on Simmons Inc.: $\begin{array}{lr}\text {Current stock price }&\%48.00\\\text { Beta}&1.1\\\text {Expected rate of return on market }&12.0\%\\\text {Risk-free rate }&6.0\%\\\end{array}$
Determine the cost of retained earnings using the capital asset pricing model approach. (Compute answer to the nearest 0.1%) .

• A) 12.9%
• B) 12.6%
• C) 13.0%
• D) None of the above

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