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, D$1,$ to be $$1\mathrm{.}90$ and it expects dividends to grow at a constant rate g $=5\mathrm{.}2\%.$ The firm's current common stock price, P$0,$ is $$25\mathrm{.}00.$ The current risk$-$free rate, rRF$,=4\mathrm{.}2\%$; the market risk premium, RPM$,=5\mathrm{.}7\%,$ and the firm's stock has a current beta, b$,=1\mathrm{.}40.$ Assume that the firm's cost of debt, rd$,$ is $10\mathrm{.}72\%.$ The firm uses a $2\mathrm{.}7\%$ risk premium when arriving at a 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? Round your answers to two decimal places.

A$.$ CAPM cost of equity:

$\%$

B$.$ Bond yield plus risk premium:

$\%$

C$.$ DCF cost of equity:

$\%$

D$.$ What is your best estimate of the firm's cost of equity?

$-$Select$-$

$1.$ The best estimate is the highest percentage of the three approaches

$2.$ The best esitmate is the average of thr three approaches

$3.$ The best estimate is the lowest percentage of the three approaches