Question: average of the three methods Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the CAP, the bond-yield plus riepremium
average of the three methods Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the CAP, the bond-yield plus riepremium approach, and the DCF model. Barton expects next year's annual dividend, Da, to be $2.00 and it expects dividends to grow at a constantrateg-48The firm's current common stock price is $25,00. The current risk free rate, , 4.5%; the market risk premium, RP6.0%, and the firm's stock has a current beta, , - 135. Assume that the firm's cost of debt, 10.00%. The firm uses a 3.0% risk premium when arriving at a ballpark estimate of its cost of equity using the bond-yield-plus riskpremium approach. What is the firm's cost of equity using each of these three approaches? Round your answers to two decimal places CAPM cost of equity Bond yield plus risk premium DCF cost of equity What is your best estimate of the firm's cost of equity
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