Last year a Japanese engineering materials corporation, Yamachi Inc., purchased U.S. Treasury bonds that returned an average of 4% per year. Now, Euro bonds are being purchased with a realized average...

Last year a Japanese engineering materials corporation,

Yamachi Inc., purchased U.S. Treasury

bonds that returned an average of 4% per year. Now,

Euro bonds are being purchased with a realized average

return of 3.9% per year. The volatility factor

of Yamachi stock last year was 1.10; but, it has increased

this year to 1.18. Other publicly traded

stocks in this same business arena are paying an

average dividend of 5.1% per year. Determine the

cost of equity capital for each year and explain why

the increase or decrease seems to have occurred.