The cost of equity for a firm
equals the firm’s pre-tax weighted-average cost of capital.
tends to remain static for firms with increasing levels of risk.
none of the options are correct.
increases as the unsystematic risk of the firm increases.
equals the risk-free rate plus the market risk premium.
can be estimated from the capital asset pricing model or the dividend growth model.

Some years ago it was estimated that the demand for steel approximately satisfied the equation p=194-25x x, and the total cost of producing x units of steel was upper c left parenthesis x right parenthesis equals 145 plus 40 x. (the quantity x was measured in millions of tons and the price and total cost were measured in millions of dollars.) determine the level of production and the corresponding price that maximize the profits.