Question: Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-yield-plus-risk-premium approach, and the DCF model, Barton expects
Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-yield-plus-risk-premium approach, and the DCF model, Barton expects next year's annual dividend, D4, to be $2.30 and it expects dividends to grow at a constant rate 9=4,2%. The firm's current common stock price, Pa, is 15.03%. The firm uses a 3.2% risk premium when arriving at a balpark estimate of its cost of equity using the bond-yield-plus-risk-premium 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 DC cost of equity: What is vour best estimate of the firm's cost of equity
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