Search this course Ch 10: End-of-Chapter Problems - The Cost of Capital CD A-Z eBook Problem Walk Through The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 7% per year. Callahan's common stock currently sells for $23.75 per share; its last dividend was $2.00; and it will pay a $2.14 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Do not found intermediate calculations, Round your answer to two decimal slom. 96 b. If the firm's beta is 2.0, the risk-free rate is 74, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. %% c. If the firm's bonds earn a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be the midooint of the risk premium rano discussed in Section 10-5 in your calculations. Round your answer to two decimal places 936 Suyub d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Calhan's cost of common equity Do not round Intermediate calculations. Round your answer to two decimal places Grade It Now Save & Continue Continue withoutsning NAM G o arch