You have the following data: rRF = 4.00%; RPM = 5.00%; and b = 1.15. What is the cost of equity from retained earnings based on the CAPM approach?

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The correct answer is A because the cost of equity from retained earnings based on the CAPM approach is 9.75%. The formula for the cost of equity from retained earnings is: rRF + b(RPM - rRF), where rRF is the risk-free rate, RPM is the expected return on the market, and b is the beta of the stock. In this case, the risk-free rate is 4.00%, the expected return on the market is 5.00%, and the beta of the stock is 1.15. Plugging these values into the formula, we get: 4.00% + 1.15(5.00% - 4.00%) = 9.75%.

You Have the Following Data: RRF = 4