What is the estimated cost of common equity

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Pan American Airlines' shares are currently trading at $68.69 each. The yield on Pan Am's debt is 6% and the firm's beta is 0.6. The T-Bill rate is 2% and the expected return on the market is 5.5%. The company's target capital structure is 45% debt and 55% equity. Pan American Airlines pays a combined federal and state tax rate of 40%. 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____%(Round to two decimal places.)

Reference no: EM131580687

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