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Unformatted text preview: . Basically, we take the component parts of the cost of equity and combine them with addition. Component Costs:-Bond Yield-Equity Risk Premium-Micro-Cap Risk Premium-Liquidity (i.e. Start-Up) Risk Premium Suppose the Treasury bond rate is 2.25% , the equity risk premium is 5.75% , the micro-cap premium rate is 2.75% , and the start-up risk premium is 3.25% . Using the Build-up Method, what is the required rate of return on this equity?...
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- Summer '11