+ judgmental*

The earnings, dividends and stock price of Tar Heel Inc are expected to grow by 4.1% per year. The Company's stock sells for $32 per share and dividend paid this period was $2.70. Using the discounted cash flow approach, what is the cost of equity? a. If the firm's Beta is 0.9, rf is 4.5% and the expected return on the market is 13.1 % , then what is the firm's b. cost of equity based on CAPM? If the firm's bonds earn a return of 7.45%, then what is the estimate of rs using the own-bond yield +judg c. risk premium approach using a 4.1 % risk premium? d. What is your estimate of Tar Heel's cost of equity based on parts a-c (using a simple average)