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Which is the standard deviation of the returns on Stock A from 2000 to 2009 closest to?
Year End Stock A Realized Return (R – R) (R – R)2
2000 46.3% 29.85%
2001 26.7% 10.25%
2002 86.9% 70.45%
2003 23.1% 6.65%
2004 0.2% -16.25%
2005 -3.2% -19.65%
2006 -27.0% -43.45%
2007 27.9% 11.45%
2008 -5.1% -21.55%
2009 -11.3% -27.75%
A) 33.2%
B) 16.4%
C) 31.5%
D) 11.0%

Your firm is planning to invest in a new generation system. Galt industries is an all equity firm that specializes in the business. Suppose Galt’s equity beta is 0.75, the risk-free rate is 3%, and the market risk premium is 6%. If your firm’s project is all equity financed, then which is your estimate of your cost of capital closet to?

a) 5.25%

b)6.00%

c)6.75%

d)7.50%