Company A is going public and trying to determine its cost of equity. Company B...
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Company A is going public and trying to determine its cost of equity. Company B Inc. is very similar to Company A and its stockis publicly traded. Company B's common stock has a beta of 2 and its debt ratio is 2/3. Company A Inc, on the other hand, is an all-equity firm. If the expected market premium is 6% and the risk-free rate is 3%, what is Company A's cost of equity?(Assume debt beta is 0 and there are no corporate taxes)
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