An estimate of the firm's cost of equity capital is:

Question

Quizplus · Accepted Answer

The cost of equity capital is the rate of return required by investors to invest in a company's common stock. It can be estimated using the dividend discount model, which takes into account the expected dividend yield and the projected growth rate of the company's earnings. Therefore, option C is the best choice as it includes both these factors in its estimation. Options A and B do not take into account the specific characteristics and risks of the company, while option D only considers the dividend yield and not the growth prospects of the firm.

An Estimate of the Firm's Cost of Equity Capital Is