Boatway Enterprises is a recently incorporated firm that makes carbon fiber fly rods. Its earnings and dividends have been growing at a rate of $30\%$ and the current dividend yield is $2\%($hint: Dividend $/$ Price$).$ Its beta is $1\mathrm{.}2,$ the return on the market is $12\%$ and the risk$-$free rate is $4\%.$

a$)$ Use the CAPM to estimate the firm$$s cost of equity.

b$)$ Now use the Gordon Growth Model to estimate cost of equity.

c$)$ Which of the two estimates do you consider to be more reasonable? Why?