According to the bond-yield-plus-risk-premium approach, a firm's cost of retained earnings, rs, can be estimated by adding a risk premium of 3 to 5 percentage points to:
A) its cost of preferred stock, rps.
B) the risk free rate of return.
C) its before-tax interest cost of debt, rs.
D) its return on equity (ROE) .
E) its after-tax interest cost of debt, rsT.
Correct Answer:
Verified
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