21. (8%) Facts of ABC Corp.: TRF = 4%, Do = $2, ra = 8%, TM...

 

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21. (8%) Facts of ABC Corp.: TRF = 4%, Do = $2, ra = 8%, TM = 10%, Po= $20, b = 1.2, g = 6%, judgmental risk premium of the stock over the bond= 3%. Based on the above facts: What should be the cost of retained earnings of ABC Corp.? Use the three approaches discussed in class, and give the rationale for your cost of retained earnings. 21. (8%) Facts of ABC Corp.: TRF = 4%, Do = $2, ra = 8%, TM = 10%, Po= $20, b = 1.2, g = 6%, judgmental risk premium of the stock over the bond= 3%. Based on the above facts: What should be the cost of retained earnings of ABC Corp.? Use the three approaches discussed in class, and give the rationale for your cost of retained earnings.

Answer rating: 100% (QA)

To calculate the cost of retained earnings using the three approaches well consider the following information TRF Riskfree rate 4 Do Dividend per shar... View the full answer