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The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 3.86%, while the market risk premium is 5.75%. The Jefferson Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Jeffersons cost of equity is 9.15% 9.61% 10.98% 10.07% The cost of equity using the bond yield plus risk premium approach | The Adams Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a companys cost of internal equity. Adamss bonds yield 10.28%, and the firms analysts estimate that the firms risk premium on its stock over its bonds is 4.95%%. Based on the bond-yield-plus-risk-premium approach, Adamss cost of internal equity is: О 16.75% О 15.23% О 14.47% О 18.28% The cost of equity using the discounted cashflow (or dividend growth) approach Johnson Enterprisess stock is currently selling for $32.45 per share, and the firm expects its per-share dividend to be $1.38 in one year. Analysts project the firms growth rate to be constant at 5.72%. Using the cost of equity using the discounted cashflow (or dividend growth) approach, what is Johnsons cost of internal equity? 9.97% 10.47% 9.47% 13.46% О О

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