Respuesta :
The cost of equity is 13.12 percent. The cost of equity is calculated using the weighted average cost of capital (WACC) formula:
Cost of Equity = WACC - (Debt / (Debt + Equity)) * (Borrowing Rate - Tax Rate)
In this case, the cost of equity is:
11.30% - (1.2/(1.2+1)) * (6.50% - 0%) = 9.65%
The cost of equity is 9.65%, which is calculated by subtracting the debt portion of the WACC (1.2/(1.2+1)) multiplied by the difference between the borrowing rate and tax rate (6.50% - 0%) from the WACC (11.30%).
The cost of equity is the return that shareholders expect in exchange for investing in a company's stock. It is calculated using the capital asset pricing model (CAPM).
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