Faye Harlan, CFA, is estimating the cost of common equity for Cyrene Corporation. She prepares the following data for Cyrene:·Price per share = $50.·Expected dividend per share = $3.·Expected retention ratio = 30%.·Expected return on equity = 20%.·Beta = 0.89.·Yield to maturity on outstanding debt = 10%.·The expected market rate of return is 12% and the risk-free rate is 3%.Based on these data, Harlan determines that Cyrene's cost of common equity is 14%. Harlan most likely arrived at this estimate by using the: —

单选题 编号：2692252

1. Faye Harlan, CFA, is estimating the cost of common equity for Cyrene Corporation. She prepares the following data for Cyrene:
·Price per share = $50.
·Expected dividend per share = $3.
·Expected retention ratio = 30%.
·Expected return on equity = 20%.
·Beta = 0.89.
·Yield to maturity on outstanding debt = 10%.
·The expected market rate of return is 12% and the risk-free rate is 3%.
Based on these data, Harlan determines that Cyrene's cost of common equity is 14%. Harlan most likely arrived at this estimate by using the:

A.Dividend discount model approach.
B.Capital asset pricing model approach.
C.Bond yield plus risk premium approach.

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