The cost ot equity using the CAPM approach The current risk-free rate of retum (TP) is 3.86% while the market risk premium is 5.75%. The Wilson Company has a beta of 0.92. Using the capital asset priang model (CAPM) approach, Wilson's cost of equity is The cost of equity using the bond yield plus risk premium 10.065% 8.235% The Harrison Company is dosely held and therefore, cannot gert e inputs with which to use the CAPM method for estimating a company's cost of internal equity. Harrison's bonds yield 11.52%, and the fi 10.98% 5 estimate that the firm's risk premium on its stock over its bonds is 4.95%. Based on the bond-yield-plus-risk premium approach, H 9.15% of internal equity is 16.47% 15.655 20.59% 19.76% The cost of equity using the discounted cash flow (or dividend growth) approach Kirby Enterprises's stock is currently selling for $32.45 per share, and the firm expects its per-share dividend to be 51.38 in one year, Analysts project the firm's growth rate to be constant at 7.27%. Estimating the cost of equity using the discounted cash flow (or dividend growth) approach, what is Kirby's cost of internal equity? 10.945 11.52% The cost of equity using the discounted cash flow (or dividend growth) approach Kirby Enterprises's stock is currently selling for $32.45 per share, and the firm expects its per-share dividend to be $1.38 in one year Analysts project the firm's growth rate to be constant at 7.27%. Estimating the cost of equity using the discounted cash flow (or dividend growth) approach, what is Kirby's cost of internal equity? 10.94% 11.52% 14.40% 15.55% Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three avslable methods to generate such an estimate: Carry forward a historical realized growth rate, and apply it to the future. Locate and apply an expected future growth rate prepared and published by security analysts. Use the retention growth model Suppose Kirby is currently distributing 65% of its earnings in the form of cash dividends. It has also historically generated an average return on equity (ROE) of 8. Kirby's estimated growth rate is the firms growth rate to be Kirby's cost of internal equity? 10.94% 11.52% 14.40% O 15.55% Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three available methods to generate such an estimate: Carry forward a historical realized growth rate, and apply it to the future. Locate and apply an expected future gro 7.65 prepared and published by security analysts. Use the retention growth model. 8.35 43.00 2.8 Suppose Kirby is currently distributing 65% of (ROE) of 8%. Kirby's estimated growth rate is hos in the form of cash divends. It has also histoncally generated an average return on equity Grade It Now Save & Continue Continue without saving I Type here to search O 3:53 PM 11/19/20