Answered

Discover answers to your most pressing questions at Westonci.ca, the ultimate Q&A platform that connects you with expert solutions. Get quick and reliable answers to your questions from a dedicated community of professionals on our platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

The Adams Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company’s cost of internal equity. Adams’s bonds yield 10.28%, and the firm’s analysts estimate that the firm’s risk premium on its stock over its bonds is 4.95%. Based on the bond-yield-plus-risk-premium approach, Adams’s cost of internal equity is:

Sagot :

Answer:

the cost of internal equity is 16.17%

Explanation:

The computation of the cost of internal equity is shown below:

= Yield of the bond + risk premium of the firm

= 10.28% + 4.95%

= 16.17%

Hence, the cost of internal equity is 16.17%

Basically we add the two things so that the cost of internal equity could be determined

Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.