Show formula for capm

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Assuming the CAPM or one-factor model holds, what is the cost of equity for a firm ifthe firm's equity has a beta of 1.2, the risk-free rate of return is 2%, the expectedreturn on the market is 10%, and the return to the company's debt is 7%?

1. Show formula for CAPM

2. Show all work for the cost of equity

3. Present the cost of equity

Reference no: EM132602340

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