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Calculate abacus cost of equity using the capm

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Reference no: EM132185202

The Abacus Computer Company has decided to use the Capital Asset Pricing Model to estimate its cost of equity. The firm's beta was estimated at 1.4. The standard and Poor's 500-stock index has returned 12.5% to investors over a fairly long period of time, and Abacus has decided to use this value as the market return. Treasury bills are currently providing investors with a 6.5% yield. Calculate abacus's cost of equity using the CAPM.

Reference no: EM132185202

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