The Cost of Equity: TeleNyckel Ltd Has a Beta of 1.4

question 60

Multiple Choice

The cost of equity: TeleNyckel Ltd has a beta of 1.4 and is trying to calculate its cost of equity capital. If the risk-free rate of return is 9 percent and the market risk premium is 5 percent, then what is the company's after-tax cost of equity capital if the company's company tax rate is 30 percent?

• A) 11.20%
• B) 10.60%
• C) 15.14%
• D) 16.00%

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Definitions:

Direct Labor

The wages paid to workers who are directly involved in the production of goods or services.

Manufacturing Overhead

Factory overhead expenses that arise during the production process of a product.

Accounts Receivable

The money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Step-Variable Cost

Costs that are fixed over a small range of activity but can change with significant changes in the volume of activity.