Employing the capital asset pricing model

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Reference no: EM132019278

Pan American Airlines' shares are currently trading at $64.48 each. The yield on Pan Am's debt is 6% and the firm's beta is 1.5 The T-Bill rate is 4% and the expected return on the market is 9%. The company's target capital structure is 65% debt and 35% equity. Pan American Airlines pays a combined federal and state tax rate of 35%. What is the estimated cost of common equity, employing the Capital Asset Pricing Model (CAPM)?

Reference no: EM132019278

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