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Estimate the cost of internal equity

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Question: Zycor Corporation obtains most of its funding internally. Assume that the stock has a beta of 1.2, the riskless rate is 6.5% and the market risk premium is 6%.

a. Estimate the cost of internal equity.

b. Now assume that the cost of issuing new stock is 5% of the proceeds. Estimate the cost of external equity.

Reference no: EM131689944

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