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Please see the different choices as options in each picture. The cost of retained earnings If a firm cannot invest retained earnings to earn a
Please see the different choices as options in each picture.
The cost of retained earnings If a firm cannot invest retained earnings to earn a rate of return return on retained earnings, it should return those funds to its s the required rate of less than greater than or equal to The cost of equity using the CAPM approaclh The yield on a three-month T-bill is 4%, the yield on a 10-year T-bond is 4.94%, the market risk premium is 9.38%. and the Monroe Company has a beta of 1.03. Using the Capital Asset Pricing Model (CAPM) approach, Monroe's cost of equity is The cost of equity using the bond yield plus risk premium approach In contrast, the Harrison Company is closely held and, therefore, cannot generate reliable inputs with which to apply the CAPM method to estimate its cost of internal equity (retained earnings). However, its management knows that its outstanding bonds are currently yielding 11.34%, and the firm's analysts estimate that the risk premium of its stocks over its bonds is currently 1.90%. As result, Harrison's cost of internal equity (rs)-based on the own-bond-yield-plus-judgemental-risk-premium approach-is 13.24% 15.89% 16.55% 12.58% The cost of equity using the discounted cash flow (or dividend-yield-plus-growth-rate) approach O Type here to search AddressStep by Step Solution
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