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True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. O False O True The cost of equity using the CAPM approach The yield on a three-month T-bill is 3.29%, and the yield on a 10-year T-bond is 4.67 %. the market risk premium is 5.75%. the D'Amico Company has a beta of 1.56. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is The cost of equity using the bond yield plus risk premium approach The Taylor Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of intemal equity. Taylor's bonds yield 10.28 % , and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 5.89. Based on the over-own-bond-yield judgmental risk premium approach, Taylor's cost of intenal equity is O 17.79% O 15.36 % O 16.17 % O 20.21 % The cost of equity using the discounted cashflow (or dividend growth) approach Johnson Enterprises's stock is currently selling for $32.45 per share, and the firm expects its per-share dividend to be $2.35 in one year. Analysts project the firm's growth rate to be constant at 7.27 %. Using the cost of equity using the discounted cashflow (or dividend growth) approach, what is Johnson's cost of internal equity? Q 14.51% O 13.78 % O 18.14 % O 19.59%

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