text identifies three methods for estimating the cost of common stock from retained earnings: the CAPM method, the DCF method, and the bond-yield-plus-risk-premium method.Since we cannot be sure that the estimate obtained with any of these methods is correct, it is often appropriate to use all three methods, then consider all three estimates, and end up using a judgmental estimate when calculating the WACC.

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The text states that there are three methods for estimating the cost of common stock from retained earnings and suggests using all three methods and using judgment when calculating the WACC.

Text Identifies Three Methods for Estimating the Cost of Common