Your firm has been hired to help ABC Company to estimate the cost of common equity. The yield on the firm's bonds is 5.75%, and your firm's economists believe that the cost of common equity can be estimated using a risk premium of 2.5% over a firm's own cost of debt. What is an estimate of the firm's cost of common equity from retained earnings?© BrainMass Inc. brainmass.com June 4, 2020, 2:21 am ad1c9bdddf
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This solution helps estimate common equity from retained earnings.