$(1)$ The firm's tax rate is $40\%.(2)$ The current price of EVBOLT's $12\%$ coupon, semiannual payment, noncallable bonds with $15$ years remaining to maturity is $$1,153\mathrm{.}72.$ The company does not use short$-$term interest$-$bearing debt on a permanent basis, and new bonds would be privately placed with no flotation cost.$(3)$ The current price of the firm's $10\%,$ $$100$ par value, quarterly dividend, perpetual preferred stock is $$116\mathrm{.}95.$ Flotation costs equal to $5\%$ of the proceeds would be incurred on a new issue.$(4)$ EVBOLT's common stock is currently priced at $$50$ per share. Its last dividend $($Do$)$ was $$3\mathrm{.}12,$ and dividends are expected to grow at a constant rate of $5\mathrm{.}8\%.$ The company's beta is $1\mathrm{.}2,$ the yield on T$-$bonds is $5\mathrm{.}6\%,$ and the market risk premium is estimated at $6\%.$ For the own$-$bond$-$yield$-$plus$-$judgmental$-$risk$-$premium approach, the firm uses a $3\mathrm{.}2\%$ risk premium.$(5)$ EVBOLT's target capital structure is $30\%$ long$-$term debt, $10\%$ preferred stock, and $60\%$ common equity.Leigh Jones has outlined specific questions to guide the analysis:d$.(1)$ What are the two primary ways companies raise common equity? $(2)$ Why is there a cost associated with reinvested earnings? $(3)$ EVBOLT doesn't plan to issue new shares of common stock. Using the CAPM approach, what is EVBOLT's estimated cost of equity?e$.(1)$ What is the estimated cost of equity using the discounted cash flow $($DCF$)$ approach? $(2)$ Suppose the firm has historically earned $15\%$ on equity $($ROE$)$ and has paid out $62\%$ of earnings, and investors expect similar values in the future. How could you estimate the future dividend growth rate? Is this consistent with the $5\mathrm{.}8\%$ growth rate given earlier? $(3)$ Could the DCF method be applied if the growth rate were not constant? How?