4. The cost of retained earnings True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. O True False The current risk-free rate of return is 4.20% and the current market risk premium is 6.60%. Fuzzy Button Clothing Company has a beta of 0.87. Using the Capital Asset Pricing Model (CAPM) approach, Fuzzy Button's cost of equity is Green Caterpillar Garden Supplies Inc. is closely held and, as a result, cannot generate reliable inputs for the CAPM approach. Green Caterpillar's bonds yield 10.20%, and the firm's analysts estimate that the firm's risk premium on its stock relative to its bonds is 4.50%. Using the bond-yield- plus-risk-premium approach, the firm's cost of equity is The stock of Blue Hamster Manufacturing Inc. is currently selling for $45.56, and the firm expects its dividend to be $1.38 in one year. Analysts project the firm's growth rate to be constant at 5.70%. Using the discounted cash flow (DCF) approach, Blue Hamster's cost of equity is estimated to be