Cost Of Equity
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- Report
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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