The yield on the firms bonds is 875 and your firms

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Reference no: EM13391960

A Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 8.75%, 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. 12.60%

b. 13.10%

c. 13.63%

d. 14.17%

e. 14.74%

Reference no: EM13391960

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