Multiple Choice
A. Butcher Timber Company hired your consulting firm to help them estimate the cost of common equity. The yield on the firm's bonds is 8.75%, and your firm's economists believe that the cost of common 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 common from retained earnings?
A) 12.60%
B) 13.10%
C) 13.63%
D) 14.17%
E) 14.74%
Correct Answer:
Verified
Correct Answer:
Verified
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