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eBook Problem Walk-Through The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $21.50 per share; its a. Using the DCF approach, what is its cost of common equity? Do not round Intermediate calculations. Round your answer to two decimal places b. If the firm's beta is 1.2, the risk-free rate is 6%, and the wverage return on the market is 146, what will be the firm's cost of common equity using the Cape approach? Round you c. I the firm's bonds earn a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be r. Use the judgmental risk premium of 44 in your calculations. Round d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Do not round Intermediate calculations. Round Grade it Now Save & Continue Continue without saving ear. Callahan's common stock currently sells for $21.50 per share; its last dividend was $2.00; and it will pay a $2.10 dividend at the end of the current year, your answer to two decimal places. e the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. er? Use the judgmental risk premium of 4% in your calculations. Round your answer to two decimal places. n's cost of common equity? Do not round Intermediate calculations. Round your answer to two decimal places 7. Problem 10.12 (WACC) eBook Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of reasong as finances at its target capital structure, which calls for 40% debt and Its common stock sells for $23. DEC's tax rate is 25. Two projects are available: Project A has a rate of return of 11%, and Projects retum is 8%. These two projects are equally risky and about anisky as the .. What is its cost of common equity? Do not round Intermediate calculations. Round your answer to two decimal places 1. What is the WACC? Do not round intermediate calculations, Round your answer to two decimal places c. Which projects should Empire accept? PA Pet Grade It Now Save & Continue Continue without saving 9% as long as it finances at its target capital structure, which calls for 40% debt and 60% common equity. Its last dividend (O.) was $1.60, its expected constant growth rate is 6%, and ject B's return is 8%. These two projects are equally risky and about as risky as the firm's existing assets