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P. Daves Inc. hired you as a consultant to help them estimate their cost of equity. The yield on the firm's bonds is 5.5%, and
P. Daves Inc. hired you as a consultant to help them estimate their cost of equity. The yield on the firm's bonds is 5.5%, and Daves' investment bankers believe that the cost of equity can be estimated using a risk premium of 4.0%. What is an estimate of Daves' cost of equity from retained earnings?
a) 9.50%
b) 10.02%
c) 10.19%
d) 10.33%
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