Q. A quick approximation of the typical firm's cost of equity may be calculated by (Solved)
1. adding a 5 percent risk premium to the firm's before-tax cost of debt.
2. adding a 5 percent risk premium to the firm's after-tax cost of debt.
3. subtracting a 5 percent risk discount from the firm's before-tax cost of debt.
4. subtracting a 5 percent risk discount from the firm's after-tax cost of debt.
- a. adding a 5 percent risk premium to the firm's before-tax cost of debt.