Investors expect to recelve a dividend yield, P6D1, plus a capital gain, 9 , for a total expected return. in return. It's easy to calculate the dividend yleld; but because stock prices fiuctuate, the yield varles from day to day, which feads to fuctuations in the DCF cost of equity. Also, it is difficult to determine the proper growth especlally if past growth rates are not expected to continue in the future. However, we can use aroweh rafes. as projected by security analysts, who regularly forecast growth rates of eamings and dividends. Which method should be used to estimate r? if management has confidence in one method, it would probably use that method's estimate. Oiherwise, it might use some weighted average of the three nethods. ludgment is important and comes into play here, as is true for most decisions in finance. Quantitative Problem: Barton industries estimates its cost of common equity by using three approaches: the CADM, the Bond yieid 'pitis risk premium approach, and the DCF model. Barton expects next year's annual dividend, D Ds to be $2,10 and it expects dividends to grow at a constant rate 9=6%. The firm's current comman premizim approach, What is the firm's cost of eguity using each of these three approaches? Round wour answers to two decimal phaces CAPM ont of Equity: 3 ? Bond yield plus herk ncr cort of epuity: Which cont is your best estimate of the firm's cost of equaty