The following financial statement data pertain to Southwater, Inc., a manufacturer of women's suits (dollar amounts in millions): Total Assets $154,287 Interest-Bearing Debt $33,984 Average Pre-tax borrowing cost 7.75% Common Equity: Book Value $21,365 Market Value $66,735 Income Tax Rate 39.6% Market Equity Beta 0.77 Market Premium 7.45% Risk-free interest rate 2.5% a) Calculate the company's cost of equity capital.

The cost of equity capital is 8.24%

Explanation:

The cost of equity capital of a firm is the required rate of return on a firm's equity. In case of common equity, the required rate of return (r) can be calculated using the CAPM approach. The formula for required rate of return or cost of equity capital under this model is,

r = rRF + Beta * rpM

Where,

r = 0.025 + 0.77 * 0.0745

r = 0.082365 or 8.2365% rounded off to 8.24%

b. a single paragraph.

a paragraph is a series of sentences that are organized and make sense, and are all related to a single topic . almost every piece of writing you do that is longer than a few sentences should be organized into paragraphs. this is because paragraphs show a reader where the subdivisions of an essay begin and end, and thus the reader see the organization of the essay into subjects in order to be able to understand its main points.

the specific actions take by the fed. what the fed was attempting to do by taking these actions. the result of the actions taken by the fed