When Estimating the Cost of Equity by Use of the Bond-Yield-Plus-Risk-Premium

question 77

True/False

When estimating the cost of equity by use of the bond-yield-plus-risk-premium method, we can generally get a good idea of the interest rate on new long-term debt, but we cannot be sure that the risk premium we add is appropriate. This problem leaves us unsure of the true value of rs.

---

Definitions:

Alien Species

Organisms that have been introduced into areas outside their native range, often causing ecological disruption.

Wetlands

Areas of land that are saturated with water, either permanently or seasonally, and where oxygen-free processes prevail, often serving as natural water filtration systems and wildlife habitats.

Agriculture

The practice of cultivating the soil, growing crops, and raising livestock for food, fiber, and other products essential to human survival and economic activity.

Subdivisions

Sections into which land is divided for the purposes of sale, development, or administrative control.