(20 points) 2. You are an intern at FedEx Corporation and the CFO, Ms. Madeline Peebles asked you to estimate the growth rate and cost of equity capital (retained earnings) for FDX. Each FDX stock is expected to pay a dividend (Di) of $3.00 a share next year. You estimated the beta above in problem # 1, above. The risk- free rate is estimated as the yield on nominal 10-year US Treasury bonds, see below. The market risk premium (4- = 5.5%. FDX's dividend is expected to grow at the same constant rate, g, forever. The stock currently sells for $253.88 per share. Assuming the market is in equilibrium, where both the CAPM and DCF model should result in the same expected rate of return. US Treasury Yield Curve: 10 Yr 20 Yr 11/12/2021 0.05 0.05 007 0.17 0.53 a. What is the firm's estimated cost of equity capital for retained earnings (6) and its implied growth rate (g)? Remember: Ls=+COM-Kel= and Po=D1 - g). Date 1 Mo 2 MO 3 Mo 6 1 Yr 2 Yr 3Yr 7 Yr SY 1.24 0.85 30 Yr 1.95 0.05 135 1.99 b. Given average returns for the previous 15 years, is FedEx Corporation common stock underpriced or overpriced? (20 points) 2. You are an intern at FedEx Corporation and the CFO, Ms. Madeline Peebles asked you to estimate the growth rate and cost of equity capital (retained earnings) for FDX. Each FDX stock is expected to pay a dividend (Di) of $3.00 a share next year. You estimated the beta above in problem # 1, above. The risk- free rate is estimated as the yield on nominal 10-year US Treasury bonds, see below. The market risk premium (4- = 5.5%. FDX's dividend is expected to grow at the same constant rate, g, forever. The stock currently sells for $253.88 per share. Assuming the market is in equilibrium, where both the CAPM and DCF model should result in the same expected rate of return. US Treasury Yield Curve: 10 Yr 20 Yr 11/12/2021 0.05 0.05 007 0.17 0.53 a. What is the firm's estimated cost of equity capital for retained earnings (6) and its implied growth rate (g)? Remember: Ls=+COM-Kel= and Po=D1 - g). Date 1 Mo 2 MO 3 Mo 6 1 Yr 2 Yr 3Yr 7 Yr SY 1.24 0.85 30 Yr 1.95 0.05 135 1.99 b. Given average returns for the previous 15 years, is FedEx Corporation common stock underpriced or overpriced