The delta co. owns retail stores that market home building supplies. largo, inc. builds single family homes in residential developments. delta has a beta of 1.22 and largo has a beta of 1.34. the riskminus free rate of return is 4 percent and the market risk premium is 6.5 percent. what should delta use as their cost of equity if they decide to purchase some land and create a new residential community?

12.71%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 1.34 × 6.5%

= 4% + 8.71%

= 12.71%

The (Market rate of return - Risk-free rate of return)  is also called market risk premium and the same is used in the computation part. We ignored the bets of Delta

a dunce cap for you, you assed this 2 weeks ago

match each type of restriction with one of its effects.

a. land-use laws

b. labor laws

c. banking regulations

a. controlled development of towns and cities

b. protection of young workers

c. greater financial stability