Employing capital asset pricing model

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Reference no: EM132031359

Pan American Airlines' shares are currently trading at $69.92 each. The yield on Pan? Am's debt is 99?% and the firm's beta is 1.4. The T-Bill rate is 3.5% and the expected return on the market is 7.5%. The company's target capital structure is 55% debt and 45% equity. Pan American Airlines pays a combined federal and state tax rate of 30%. What is the estimated cost of common equity, employing the Capital Asset Pricing Model (CAPM)?

The estimated cost of common equity for Pan American Airlines is ________%

Reference no: EM132031359

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