LA 54 Paragraph S Styles 2. Expected growth rate of earnings, dividends, and stock price of AYS, Inc. is the same at 7% per year in the future. The company's common stock sells for $20 per share, its last dividend was $2.00, and the company will pay a dividend of $2.14 at the end of the current year. a) Using the discounted cash flow approach, what is its cost of equity? b) If the firm's beta is 1.6, the risk-free rate is 9%, and the expected return on the market is 13%, then what would be the firm's cost of equity based on the CAPM approach? c) If the firm's bonds earn a return of 12%, then what would be your estimate of rs using the own-bond-yield-plus-judgmental-risk-premium approach? (Hint: Use a 4% risk premium.) Editing Void