2. You have been asked to compare two banks Suntrust Banks and Southwest Banks. Suntrust has a market value of equity of $ 1.5 billion, a book value of equity of $ 750 million and is expected to earn 20% as its return on equity. Southwest Banks has a market value of equity of $ 1.00 billion and a book value of equity of $ 750 million. Both firms are in stable growth, growing at 5% a year, and the same cost of equity.

a. Assuming that Suntrust is correctly valued by the market, estimate the cost of equity for the bank.

b. Using the cost of equity estimated in part a, estimate the return on equity that Southwest Banks is expected to earn in the future. (You can assume that Southwest is correctly valued as well)

please answer the question in step by step detailed calculations for all the parts and include the formulas used and what each symbol means in them. please only do it if you give it your time and thoughts.