Answered

Discover a world of knowledge at Westonci.ca, where experts and enthusiasts come together to answer your questions. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

According to the bond-yield-plus-risk-premium approach, a firm's cost of retained earnings, r s , can be estimated by adding a risk premium of 3 to 5 percentage points to its _____.

Sagot :

Tundexi

The approach suggest that a firm's cost of retained earnings can be estimated by adding a risk premium of 3% to 5% points to the before-tax interest rate on the firm's own long-term debt.

The bond-yield-plus-risk-premium approach does assumes that cost of equity is closely related to the firm's cost of debt.

  • The premium approach does help to determine the value of an assetof a company's such as its traded equity.

However, the approach suggest that a firm's cost of retained earnings can be estimated by adding a risk premium of 3% to 5% points to the before-tax interest rate on the firm's own long-term debt.

Read more about the premium approach:

brainly.com/question/20354983

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.