XYZ Inc
Subject:FinancePrice:2.86 Bought7
XYZ Inc. hired you to help them estimate the cost of equity. The yield on the firm's bonds is 6%, and you believe that the cost of equity can be estimated using a risk premium of 3.45% over a firm's own cost of debt. What is an estimate of the firm's cost of equity?
a. 9.99% b. 12.45% c. 9.45% d. 15.16% e. 10.45%
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c. 9.45%
as yield on bond = 6%
risk premium = 3.45%
cost of equity = 6+3.45=9.45%
