Question 4 (10 points) Saved Your consultant firm has been hired by Eco Brothers Inc. to...
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Question 4 (10 points) Saved Your consultant firm has been hired by Eco Brothers Inc. to help them estimate the cost of common equity. The firm's annual bonds have the current price of $987.31, par value of $1,000, coupon rate of 8.5%, and time to maturity of 7 years. Your firm's economists believe that the cost of common stock can be estimated using a judgmental risk premium of 3.85% over a firm's own cost of debt. What is the estimate of the firm's cost of common stock from reinvested earnings? 14.74% 13.10% 12.60% 13.63% 14.17% Question 4 (10 points) Saved Your consultant firm has been hired by Eco Brothers Inc. to help them estimate the cost of common equity. The firm's annual bonds have the current price of $987.31, par value of $1,000, coupon rate of 8.5%, and time to maturity of 7 years. Your firm's economists believe that the cost of common stock can be estimated using a judgmental risk premium of 3.85% over a firm's own cost of debt. What is the estimate of the firm's cost of common stock from reinvested earnings? 14.74% 13.10% 12.60% 13.63% 14.17%
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