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COST OF EQUITY Strategic Corporate Finance Strategic Corporate Finance Vonage Holding Corporation Cost of Equity = RF + ßj (RM - RF ) Cost of Equity = 0.10 + 1.89 (0.07) Cost of Equity = 0.10 + 0.13 Cost of Equity = 0.23 or 23 % As the average cost of capital for a firm in the S & P 500 is 10.2 %. Therefore, the Vonage Holding Corporation should have the higher cost of capital. The cost of equity of Vonage Holding Corporation is 23 % which is higher than the average firm. AT&T Incorporation Cost of Equity = RF + ßj [ RM - RF ] Cost of Equity = 0.10 + 0.55 [ 0.07 ] Cost of Equity = 0.10 + 0.039 Cost of Equity = 0.139 or 13.9% Verizon Communications Incorporation Cost of Equity = RF + ßj [ RM - RF ] Cost of Equity = 0.10 + 0.52 [ 0.07 ] Cost of Equity = 0.10 + 0.036 Cost of Equity = 0.136 or 13.6% Sprint Nextel Corporation Cost of Equity = RF + ßj [ RM - RF ] Cost of ...
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