2. The Discounted Cash Flow model (referred to as the Direct Dividend Model in the MBA preferred by wealthy investors. The formula reduces to r, = (D, / P. ) + g where r, is the re Cost of Equity, D, is the expected future dividend, P is the rice of the stock today and g is dividends. The CFO notes that the expected future dividend is $2.38 and the expected gr per share as the stock price. Calculate the cost of equity r, using the DCF approach