I. If a firm cannot invest retained earnings to earn a rate of return (less than/greater...

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I. If a firm cannot invest retained earnings to earn a rate ofreturn (less than/greater than or equal to) therequired rate of return on retained earnings, it should returnthose funds to its stockholders.
II. The current risk-free rate of return is 3.80% and thecurrent market risk premium is 6.60%. Blue Hamster ManufacturingInc. has a beta of 1.56. Using the Capital Asset Pricing Model(CAPM) approach, Blue Hamster’s cost of equity is(18.33%/15.51%/14.81%/14.10%)
III. Fuzzy Button Clothing Company is closely held and, as aresult, cannot generate reliable inputs for the CAPM approach.Fuzzy Button’s bonds yield 11.50%, and the firm’s analysts estimatethat the firm’s risk premium on its stock relative to its bonds is4.50%. Using the bond-yield-plus-risk-premium approach, the firm’scost of equity is(20.00%/17.60%/19.20%/16.00%).
IV. The stock of Cute Camel Woodcraft Company is currentlyselling for $32.45, and the firm expects its dividend to be $1.38in one year. Analysts project the firm’s growth rate to be constantat 5.70%. Using the discounted cash flow (DCF) approach, CuteCamel’s cost of equity is estimated to be(10.45%/13.43%/12.44%/9.95%) .

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I. If a firm cannot invest retained earnings to earn a rate ofreturn (less than/greater than or equal to) therequired rate of return on retained earnings, it should returnthose funds to its stockholders.II. The current risk-free rate of return is 3.80% and thecurrent market risk premium is 6.60%. Blue Hamster ManufacturingInc. has a beta of 1.56. Using the Capital Asset Pricing Model(CAPM) approach, Blue Hamster’s cost of equity is(18.33%/15.51%/14.81%/14.10%)III. Fuzzy Button Clothing Company is closely held and, as aresult, cannot generate reliable inputs for the CAPM approach.Fuzzy Button’s bonds yield 11.50%, and the firm’s analysts estimatethat the firm’s risk premium on its stock relative to its bonds is4.50%. Using the bond-yield-plus-risk-premium approach, the firm’scost of equity is(20.00%/17.60%/19.20%/16.00%).IV. The stock of Cute Camel Woodcraft Company is currentlyselling for $32.45, and the firm expects its dividend to be $1.38in one year. Analysts project the firm’s growth rate to be constantat 5.70%. Using the discounted cash flow (DCF) approach, CuteCamel’s cost of equity is estimated to be(10.45%/13.43%/12.44%/9.95%) .