Find out the company cost of capital


Problem:

The market value of Charcoal Corporation's common stock is $20 million, and the market value of its risk-free debt is $5 million. The beta of the company's common stock is 1.25, and the market return (Km) is 13%.

Required:

Question: If the Treasury bill rate (Rf) is 5%, what is the company's cost of capital?

Note: Show supporting computations in good form.

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Accounting Basics: Find out the company cost of capital
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