Multiple Choice
The risk-free rate of return is 2.5% and the market risk premium is 8%.Rogue Transport has a beta of 2.2 and a standard deviation of returns of 28%.Rogue Transport's marginal tax rate is 35%.Analysts expect Rogue Transport's dividends to grow by 6% per year for the foreseeable future.Using the capital asset pricing model,what is Rogue Transport's cost of retained earnings?
A) 16.4%
B) 17.7%
C) 19.6%
D) 20.1%
Correct Answer:
Verified
Correct Answer:
Verified
Q95: The after-tax cost of equity equals one
Q96: A firm's weighted average cost of capital
Q97: What are the implications for a firm's
Q98: If a firm were to earn exactly
Q99: Jiffy Co.expects to pay a dividend of
Q101: The capital asset pricing model uses three
Q102: A reasonable estimate of the market risk
Q103: All the following variables are used in
Q104: Flotation costs cause a corporation's cost of
Q105: In general,which of the following rankings,from highest