Assignment 10 -The Cost of Capital Activity Information Due Today at 11 PM CDT Aa Aa 5. 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. Q True False The cost of equity using the CAPM approach The current risk-free rate of return (rRr) is 4.23%, while the market risk premium is 6.63%. the wilson Company has a beta of 0.78. Using the Capital Asset Pricing Model (CAPM) approach, wilson's cost of equity is 8.46% 9.40% 9.87% The cost of equity using the bond yield plus risk premium app 10.34% The Jackson 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. Jackson's bonds yield 10.28%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 3.s5%. Based on the bond yield-plus-risk premium approach, Jackson's cost of internal equity is: 13.14% O 16.60% Q 15.21% O 13.83% The cost of equity using the discounted cashflow (or dividend growth) approach Johnson 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%, Using the cost of equity using the discounted cashflow (or dividend growth) approach, what is Johnson's cost of internal equity? 16.42% 15.60% 17.24% 22.17% Exper