The cost of equity for a firm is: A) determined by directly observing

The cost of equity for a firm is:

A) determined by directly observing the rate of return required by equity investors.
B) based on estimates derived from financial models.
C) equivalent to a leveraged firm’s cost of capital.
D) equal to the risk-free rate of return plus the market risk premium.
E) equal to the risk-free rate of return plus the dividend growth rate.

ANSWER

B