1. The cost of retained earnings The cost of raising capital through retained earnings is the cost of raising capital through issuing new.common stock The cost of equity using the CAPM approach The current is free rate of return (TR) is 4.23% while the market risk premium is 6.63%. The Monroe Company has a beta of 0.78. Using the capital asset pricing model (CAPM) approach, Monroe's cost of equity is The cost of equity using the bond yield plus risk premium approach The Hoover Company is closely held and therefore, cannot generate reliable inputs with wide to the CAPM method for estimating a company's cost of internal equity. Hoover's bonds yield 10.28%, and the firm's analysts estimate that the tim's risk premium on its stock over its bonds 3.55. Based on the bond yield plus risk premium approach, Hoovercost of internal equity 15:21 13.14 17.00 13