### Estimate of the firms cost of equity from retained earnings

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##### Reference no: EM13809211

A. Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 10.50%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 4.85% over a firm's own cost of debt. What is an estimate of the firm's cost of equity from retained earnings?

14.35%

12.62%

15.35%

16.92%

17.50%

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