How should the firm determine its cost of equity

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Colorado Aquatics maintains a debt to equity ratio of 0.50 and reinvests all profits into the company. How should the firm determine its cost of equity? A)By adding the market risk premium to the after tax cost of debt. B)By using the capital asset pricing model. C)By multiplying the market risk premium by 1.55. D) By averaging the costs based on the dividend growth model and the capital asset pricing model. E)By using the dividend growth model.

Reference no: EM131613762

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