Keep the Highest $/4$

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 current risk$-$free rate of return is $4\mathrm{.}60\%$ and the current market risk premium is $6\mathrm{.}60\%.$ Green Caterpillar Garden Supplies Inc. has a beta of

$1\mathrm{.}56.$ Using the Capital Asset Pricing Model $($CAPM$)$ approach, Green Caterpillar's cost of equity is

Cute Camel Woodcraft Company is closely held and, as a result, cannot generate reliable inputs for the CAPM approach. Cute Camel's bonds yield

$10\mathrm{.}20\%,$ and the firm's analysts estimate that the firm's risk premium on its stock relative to its bonds is $4\mathrm{.}50\%.$ Using the bond$-$yield$-$plus$-$risk$-$

premium approach, the firm's cost of equity is

The stock of Cold Goose Metal Works Inc. is currently selling for $$32\mathrm{.}45,$ and the firm expects its dividend to be $$1\mathrm{.}38$ in one year. Analysts project the

firm's growth rate to be constant at $5\mathrm{.}70\%.$ Using the discounted cash flow $($DCF$)$ approach, Cold Goose's cost of equity is estimated to

be