The cost of raising capital through retained earnings is ( GREATER THAN / LESS THAN ) the cost of raising capital through issuing new common stock. The current risk-free rate of return is 3.80% and...

Extracted text: The cost of raising capital through retained earnings is the cost of raising capital through issuing new common stock. The current risk-free rate of return is 3.80% and the current market risk premium is 5.70%. Blue Hamster Manufacturing Inc. has a beta of 0.87. Using the Capital Asset Pricing Model (CAPM) approach, Blue Hamster's cost of equity is Fuzzy Button Clothing Company is closely held and, as a result, cannot generate reliable inputs for the CAPM approach. Fuzzy Button's bonds yield 10.20%, and the firm's analysts estimate that the firm's risk premium on its stock relative to its bonds is 4.50%. Using the bond-yield-plus-risk- premium approach, the firm's cost of equity is The stock of Cute Camel Woodcraft Company is currently selling for $32.45, and the firm expects its dividend to be $1.38 in one year. Analysts project the firm's growth rate to be constant at 5.70%. Using the discounted cash flow (DCF) approach, Cute Camel's cost of equity is estimated to be