would have been $4\mathrm{.}4\%$

$($a$)$ Estimate P&G$\text{'}$s cost of equity capital using the CAPM model. $($Round your answer to one decimal place.$)$

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$($c$)$ Discuss the appropriateness of the estimate computed in part $($b$)$ in light of its assumption for no future dividend growth.

The DDM model with a constant perpetuity would correctly estimate P&G$\text{'}$s intrinsic value The DDM model with a constant perpetuity would likely overestimate P&G$\text{'}$s intrinsic value The DDM model with a constant perpetuity would likely underestimate P&G$\text{'}$s intrinsic value

$($d$)$ If we use the Gordon growth DDM to estimate stock value per share, which sales growth rate should we use $(20\mathrm{.}2\%$ or $4\mathrm{.}4\%)?$ Explain. The $4\mathrm{.}4\%$ rate is appropriate. The $20\mathrm{.}2\%$ rate would overestimate the growth rate because the $2005$ sales number does not inciude sales from Gillette. The $20\mathrm{.}2\%$ rate is appropriate. The $4\mathrm{.}4\%$ rate would underestimate the growth rate because the $2006$ sales does not include sales from Gillette. $*$

Comment on the reasonableness of this inferred growth rate Investors seem to expect P&G to grow at the same rate as the historical number of $4\mathrm{.}4\%.$ Investors seem to expect P&G to grow at a slower rate than the historical number of $4\mathrm{.}4\%.$ Investors seem to expect P&G to grow at a faster rate than the historical number of $4\mathrm{.}4\%$