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might use some weighted average of the three meu Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the CAPM,

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might use some weighted average of the three meu Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-yield-plus-risk-premium approach, and the DCF model. Barton expects next year's annual dividend, D, to be $1.80 and it expects dividends to grow at a constant rate g - 5.2%. The firm's current common stock price, Po, is $20.00. The current risk-free rate, 4.4%; the market risk premium, RPM, 5.7%, and the firm's stock has a current beta, b, - 1.15. Assume that the firm's cost of debt, rais 14.75%. The firm uses a 2.7% risk premium when arriving at a ballpark estimate of its cost of equity using the bond-yield-plus-risk-premium approach. What is the firm's cost of equity using each of these three approaches? Round your answers to two decimal places. CAPM cost of equity: % Bond yield plus risk premium: % DCF cost of equity % What is your best estimate of the firm's cost of equity? -Select

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