The cost of retained earnings the required rate of return on retained earnings, it If a firm cannot invest retained earnings to earn a rate of return should return those funds to its stockholders. The cost of equity using the CAPM approach The yield on a three-month T-bill is 3%, the yield on a 10-year T-bond is 3.67%. The market risk premium is 6.97% and the Jefferson Company has a beta of 0.80. Using the Capital Asset Pricing Model (CAPM) approach, Jefferson's cost of equity is The cost of equity using the bond yield plus risk premium approach In contrast, the Hoover 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 8.42%, and the firm's analysts estimate that the risk premium of its stocks over its bonds is currently 1.48%. As result, Hoover's cost of internal equity (s)-based on the own-bond-yield-plus-judgemental-risk-premium approach-is: O 11.88% O 9.90% O 9.40% O 10.89% The cost of equity using the discounted cash flow (or dividend-yield-plus-growth-rate) approach Ford Enterprises's stock is currently selling for $18.75 per share, and the firm expects its per-share dividend to be $3.75 in one year. Analysts project the firm's growth rate to be constant at 5.80%. Using the discounted cash flow (or dividend-yield-plus-growth-rate) approach, what is Ford's cost of internal equity? 25.80% 0 24.51% O 27.09% O 21.93%