Cost of capital of opportunity assuming risk-free rate

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Reference no: EM131055278

You have just graduated with an MBA and have always been a coffee aficionado. During your two years you spent many a night in Peets Coffee and Tea (PEET), and are wondering whether you might replicate their success in locations where they have not yet expanded. Checking Google: Finance, we find that Peets has no debt, and an estimated beta of 0.83. To develop your financial plan, estimate the cost of capital of this opportunity assuming a risk-free rate of 3% and a market risk premium of 5%.

Reference no: EM131055278

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