FlavR Co. stock has a beta of 2.0, the current risk-free rate is 2,

FlavR Co. stock has a beta of 2.0, the current risk-free rate is 2, and the expected return on the market is 9 percent. What is FlavR Co’s cost of equity?

 

2 + 2.0 × (9 − 2) = 16 percent.

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