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Compute the cost of equity capital using both the capm

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Consider Softmike, a software company. Softmike's world market beta is 1.75. Regressing Softmike's return on the world market return and the global HML factor gives betas of 1.50 and -1.2, respectively. Assume that the world equity premium is 6%, the HML premium is 3%, and the risk-free rate is 5%. Compute the cost of equity capital using both the CAPM and the Fama-French model. Is Softmike a value company or a growth company?

Reference no: EM131116333

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