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Business, 04.03.2020 21:11 photagraphykid

Your consulting firm has been hired by Eco Brothers Inc. to help them estimate the cost of common equity. The yield on the firm's bonds is 8.75%, and your firm's economists believe that the cost of common 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 common from reinvested earnings?

a. 12.60%

b. 13.10%

c. 13.63%

d. 14.17%

e. 14.74%

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