Question

Thermacorp is in the heating and cooling industry and has total assets of $20 million, with stockholders' equity of $15 million, an ROE of 17.3%, and a firm Beta of 1.6. If the risk free rate of return is 4 and the market rate of return is 10, what is the cost of equity?

A) 19.6

B) 7.75

C) 13.6

D) 25.28

Answer

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