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 DC 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 DC model. Barton expects next year's annual dividend, D., to be $2.30 and it expects dividends to grow at a constant rate : 4,5%. The firm's current common stock price, Pois $28.00. The current is free rate the market risk premium, RP.-6.3%, and the firm's stock has a current beta, b, = 1.1. Assume that the firm's cost of dett, 8.02%. The form uses a 4.3% nisk premium when aming anis ballpark 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? Do not round Intermediate calculations. Round your answers to two decimal places CAPM cost of equity! Bond-Yield-Plus-Risk Premium DCF cost of equity If you are equally confident of all three methods, then what is the best estimate of the firm's cost of equity
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