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The common stock of Anthony Steel has a beta of 1.20. The risk-free rate is...

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Finance

The common stock of Anthony Steel has a beta of 1.20. The risk-free rate is 5 percent and the market risk premium (kM - kRF) is 6 percent. Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget. What is the companys cost of retained earnings?

a. 7.0%

b. 7.2%

c. 11.0%

d. 12.2%

e. None of the above

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