Fidn out the firm cost of equity capital

Question

Problem:

Landscapers R Us, Inc., has a beta of 1.6 and is trying to calculate its cost of equity capital.

Required:

If the risk-free rate of return is 4 percent and the expected return on the market is 10 percent, then what is the firm's cost of equity capital?

• 13.6%
• 6.4%
• 20.0%
• 9.6%

Note: Please show guided help with steps and answer.