A.Butcher Timber Company hired your consulting firm to help them estimate the cost of equity.The yield on the firm's bonds is 12.00%,and your firm's economists believe that the cost of equity 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 equity from retained earnings?
A) 15.85%
B) 14.74%
C) 12.52%
D) 13.31%
E) 14.58%
Correct Answer:
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