To match the economic life of the project, we will use the prevailing yield of long term bonds. Yield to maturity of 30-Year Bonds is 6.61% So the estimate of risk-free rate that should be employed in calculating the cost of capital for Ameritrade should be 6.61% What is the estimate of the market risk premium that should be employed in calculating the cost of capital for Ameritrade? We should use the difference between the historical large company stock and the long term bonds as the appropriate market risk premium...
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To match the economic life of the project, we will use the prevailing yield of long term bonds. Yield to maturity of 30-Year Bonds is 6.61% So the estimate of risk-free rate that should be employed in calculating the cost of capital for Ameritrade should be 6.61% What is the estimate of the market risk premium that should be employed in calculating the cost of capital for Ameritrade? We should use the difference between the historical large company stock and the long term bonds as the appropriate market risk premium...
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