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The firms beta is 145 the rate on six-month t-bills is 331

Finance: Cost of equity financing

Question

The Yo-Yo Corporation tries to determine the appropriate cost for retained earnings to be used in capital budgeting analysis. The firm's beta is 1.45. The rate on six-month T-bills is 3.31%, and the return on the S&P 500 index is 7.81%. What is the appropriate cost for retained earnings in determining the firm's cost of capital?

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Finance Basics: The firms beta is 145 the rate on six-month t-bills is 331

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