(Answered) A method of determining a companys cost of retained earning

Engineering

A method of determining a company's cost of retained earning is the own bond plus risk premium approach. This approach assumes that the risk of a company is embedded in its bond yield and the required retained earning yield is the company's bond yield plus a risk premium. If a company has BBB rated bonds with a yield of 0.07 and the risk premium is 0.02, what is the company's cost of retained earnings?

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