4. The cost of retained earnings rate of return on retained earnings, it If a firm cannot Invest retained earnings to earn a rate ofre should return those funds to its stockholders The cost of equity using the CAPM approach beta of 1.50. Using the The current risk-free rate of return (hu) is 4.23% while the market risk premiu capital asset pricing model (CAPM) approach, Jefferson's cost of equity is The cost of equity using the bond yield plus risk premium approach The Adams Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of Internal equity, Adams's bonds yield 11.52%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 5.89 Based on the bond-yield-plus-risk.premium approach, Adams's cost of internal equity is 19.15% 16.54% 17.41% 21.76% The cost of equity using the discounted cash flow (or dividend growth) approach Grant Enterprises's stock is currently selling for $25.67 per share, and the firm expects its per share dividend to be $2.35 in one year. Analysts project the firm's growth rate to be constant at 7.27%. Estimating the cost of equity using the discounted cash flow (or dividend growth) approach what is Grant's cost of internal equity? 17.24% 22.17% 16.42% 15.60% Estimating growth rates of existing equity using the DCF or DG approach. It is often difficult to estimate the expected future dividend growth rate for use In general, there are three available methods to generate such an estimate Carry forward a historical realized growth rate, and apply it to the future. Locate and apply an expected future growth rate prepared and published by security Use the retention growth model. Suppose Grant is currently distributing 45% of its earnings in the form of cash dividends. It has also historically generated an average return on equity (ROE) of 18%. Grant's estimated growth rate is Grade It Now Save & Continue