Cost of Common Equity, The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpettos common stock currently sells for $23.00 per share; its last dividend was $2.00; and it will pay a $2.14 dividend at the end of the current year.

A. Using the DCF approach, what is its cost of common equity?

B. If the firms beta is 1.6, the risk-free rate is 9%, and the average return on the market is 13%, what will be the firms cost of common equity using the CAPM approach?

C. If the firms bonds earns a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in section 10-5 in your calculations.

D. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpettos cost of common equity?