15. Problem 9-10 (Cost of Equity) eBook Problem Walk-Through Cost of Equity The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 8% per year in the future. Shelby's common stock sells for $23 per share, its last dividend was $2.00, and the company will pay a dividend of $2.16 at the end of the current year. a. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. % b. If the firm's beta is 1.7, the risk-free rate is 8%, and the expected return on the market is 13%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places % c. If the firm's bonds eam a return of 13%, then what would be your estimate of r, using the own-bond-yield-plus-judgmental-risk-premium approach? (Het te the mid- point of the risk premium range.) Round your answer to two decimal places d. On the basis of the results of parts a-c, what would be your estimate of Shelby's cost of equity Assume Shelby values each approach equally. Round your answer to two decimal places %