Question: Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings and dividends have been growing at a rate of 35.0%, and

Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment

Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings and dividends have been growing at a rate of 35.0%, and the current dividend yield is 7.00%. Its beta is 1.30, the market risk premium is 13.00%, and the risk-free rate is 3.00% a. Use the CAPM to estimate the firm's cost of equity. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of equity % b. Now use the constant growth model to estimate the cost of equity. (Do not round intermediate calculations. Enter your answer as a whole percent.) % Cost of equity c. Which of the two estimates is more reasonable? O CAPM O Growth model

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