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... to order their shopping online. Tesco is now expanding its convenience stores and overseas into areas such as Taiwan, Malaysia, Poland, the US and Ireland 2. Capital Assets pricing model to calculate cost of equity (Tesco plc) The CAPM says that the expected return on any asset donated by E(Ri), depends upon the risk free rate, the security's beta and the market risk premium: Risk free rate The interest rate that is given on gilts is taken as the risk free rate because the British Government is reckoned to be one of the least likely entities in the world to default on a loan, this rate of interest is reckoned to be about as close to risk-free as you can get. In the UK this century, it has been about 5.6% per year. (www.fool.co.uk) Beta The Beta is taken as .93 from London Business School risk analysis Market return premium The market return is assumed at 8% depending ...