Click here to read the eBook: The Cost of Retained Earnings, Problem Walk-Through COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 6% per year. Callahan's common stock currently sells for $25.00 per share; its last dividend was $2.00; and it will pay a $2.12 dividend at the end of the current year. a. Using the DC approach, what is its cost of common equity Round your answer to two decimal places. Do not round your intermediate calculations. % b. If the firm's beta is 0.90, the risk free rate is 7%, and the werage return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places Cather's bonds earn a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be r? Use the midpoine or the risk premium range discussed in Section 10-5 in . d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations Click here to read the eBook: The Cost of Retained Earnings, COST OF COMMON EQUITY Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 10%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 14.00% What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places