Find ks using the own-bond-yield-plus-risk-premium method.  (kd = 10%, RP = 4%.)

© 1998 The Dryden Press

• This RP = CAPM RP.

• Produces ballpark estimate of ks. Useful check.

ks = kd + RP

= 10.0% + 4.0% = 14.0%

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