27.89 Question 16 Warnings in the US public corporate sector are aspected to grow at a 5 percent per year real growth rate. Consistent with that, the market P/E ratio is expected to grow 1 percent per year. The long-term forecast is for an inflation rate of 3 percent per year. The forward dividend yield on the market index is 1 percent. Currently the government 10 year maturities bond yields are 2 percent. Based on these forecasts, a supply side estimate of the equity risk premium as presented by The Ibbotson- Chen earnings model is closest to O pts 7:29 323 3.00 ON Question 17 Pretax cost of debt-4% Long-term debit as a percent of total capital, at market value - 35% Marginal tax rate -30% Beta-2.00 O pts