Multiple Choice
A.Butcher Timber Company hired your consulting firm to help them estimate the cost of equity.The yield on the firm's bonds is 6.75%,and your firm's economists believe that the cost of equity can be estimated using a risk premium of 3.85% over a firm's own cost of debt.What is an estimate of the firm's cost of equity from retained earnings?
A) 10.60%
B) 9.54%
C) 12.19%
D) 12.51%
E) 7.95%
Correct Answer:
Verified
Correct Answer:
Verified
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