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What is mccormick and company required return on issuance

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Reference no: EM132535017

Point 1: Now that McCormick & Company has secured the land for the new factory through a loan, now it is time to construct the new factory. Instead of using operating cash flow to fund the construction of the new factory, McCormick & Company has decided to raise capital. To raise additional capital the company is considering issuing additional shares of stock. For McCormick & Company to determine how much it will cost the company to issue stock, the company must determine the required return on the stock in relation to the systematic risk. We can help McCormick & Company with this by answering the following questions using the provided information below:

Point 2: McCormick & Company uses the 10-Year Treasury Constant Maturity Rate as the risk-free rate. As of 7/1/2019, this was 2.03 according to the U.S. Treasury.

Point 3: McCormick & Company has disclosed the company's levered Beta is 1.35 (MarketWatch, 7/1/2019).

Point 4: McCormick & Company has disclosed the company's expected return on the market is 8.03%

Question 1. What is McCormick & Company's required return on the issuance of stock using CAPM?

Reference no: EM132535017

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