An analyst does research about capital ass

问题单项选择题

An analyst does research about capital asset pricing model approach and gathers the following information about a company and the market:

Equity beta	1.5
Equity risk premium	15%
Risk-free rate	3%
Before-tax cost of company's debt	9%

Using the capital asset pricing model approach, the company's cost of equity capital is closest to:（）

A. 18.0%

B. 21.0%

C. 25.5%

答案

参考答案：A

解析：

根据公式K_ce=RFR+β[E(R_m)-RFR]，其中β[E(R_m)-RFR]等于Equity risk，可得： K_ce=RFR+Equity rish premium=3%+15%=18%。