Question: a. Suppose you are an analyst with the following data: rRF = 5.5%; rM - rRF = 6%; b = 0.8; D1 = $1.00; P0

a. Suppose you are an analyst with the following data: rRF = 5.5%; rM - rRF = 6%; b = 0.8; D1 = $1.00; P0 = $25.00; g = 6%; rd = firm's bond yield = 6.5%. What is this firm's cost of equity using the CAPM approach?

b. Suppose you are an analyst with the following data: rRF = 5.5%; rM - rRF = 6%; b = 0.8; D1 = $1.00; P0 = $25.00; g = 6%; rd = firm's bond yield = 6.5%. What is this firm's cost of equity using the DCF approach?

c. Suppose you are an analyst with the following data: rRF = 5.5%; rM - rRF = 6%; b = 0.8; D1 = $1.00; P0 = $25.00; g = 6%; rd = firm's bond yield = 6.5%. What is this firm's cost of equity using the bond-yield-plus-risk-premium approach? Use the mid-range of the judgmental risk premium.

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