Calculate the cost of each capital component, that is, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). Use both the DCF method and the CAPM method to find the cost of equity. Cost of debt: B-T rd times (1-T) = A-T rd Cost of preferred stock (including flotation costs): Dpf/Net Ppf = rpf Cost of common equity, DCF (ignoring flotation costs): D1/P0+ g= rs Cost of common equity, CAPM: rRF+b times RPM =rs IMPORTANT NOTE: HERE THE CAPMAND THE DCF METHODS PRODUCEAPPROXIMATELYTHE SAME COSTOF EQUITY THAT OCCURRED BECAUSE WE USED ABETA IN THE PROBLEM THAT FORCED THE SAME RESULT ORDINARILY THE TWO METHODS WILL PRODUCE SOMEWHAT DIFFERENT RESULTS