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Your consultant firm has been hired by Eco Brothers Inc. to help them estimate the cost of common equity. The yield on the firm's bonds

Your consultant firm has been hired by Eco Brothers Inc. to help them estimate the cost of common equity. The yield on the firm's bonds is 8.75%, and your firms economist believe that the cost of common can be estimated using a risk premium of 3.85% over a firm's cost of debt. What is an estimate of the firm's cost of common from retained earnings?

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