5. Does the estimation of the cost of equity (common stock) follow a similar process? How might the team go about estimating the cost of common stock (or required rate of return)?

a. In answering this question assume the following:

i. dividend history shows an average growth rate of 4.77%

ii. current annual dividend is $2.08

iii. current price of Targets stock is $98.75

iv. stocks beta is 0.56

v. 10-year government bond yield is 2.65 percent

vi. Estimated market risk premium is 4.8%