You have been hired as a consultant by Feludi Inc.'s CFO, who wants you to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.30. Based on the CAPM approach, what is the cost of common from reinvested earnings?
A. 9.67%
B. 9.97%
C. 10.28%
D. 10.60%
E. 10.93%
Answer: E
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What will be an ideal response?
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