Use excel and please show step by step formulas used to solve in excel for Problem $14\mathrm{.}3$: The common stock for Callahan Corporation currently sells for $$65,$ and the dividend paid last year was $$2\mathrm{.}50$ and is expected to grow at an annual rate of $5\mathrm{.}0\%$ in the future.

a$.$ What is the estimated cost of common equity to the firm using the dividend growth model?

b$.$ Callahan's CFO has asked her financial analyst to estimate the firm's cost of common equity using the CAPM as a way of validating the earlier calculations. The risk$-$free rate of interest is currently $4\mathrm{.}0$ percent, the market risk premium is estimated to by $5\mathrm{.}5$ percent, and Callahan's beta is $\mathrm{.}95.$ What is your estimate of the firm's cost of common equity using this method?

Part a

$\backslash$table$[[$market price,$],[$D$0,],[$G$,],[$D$1,],[$Cost of Common Equity using div growth,$]]$

Calculation

See formula $14-3$a on page $457$

Part b

$\backslash$table$[[$Risk$-$free rate,$],[$Market risk premium,$],[$Beta$,],[$Cost of Common Equity using CAPM,$]]$

see formula $14-4$ on page $460$