Part III (40 Points): Cost of Equity (2-3pages)In Part III, we are going to calculate the companys cost of equity in two different ways, first using the dividend growth model and then the CAPM method. Please review this content from the workbook before starting. First, we will start with the dividend growth model. i)Use the year-end price in 2019 (the last price that is available in that year)as the current price(We are going to pretend that were at the year-end of 2019. This is because we dont have 2020 data in full. Were still in the middle of it.). That is, what was the adjusted closing price of the stock on the last trading day of the year 2019?ii)Find the companys annual dividends during the 5-year period 01/01/2015-12/31/2019. Make sure they are sorted in the ascending order of dates. Plot the dividends with the dates on the horizontal axis and the dividends on the vertical axis. Describe the plot and check when the the dividends have bee n paid in a constant growth pattern. iii)Calculate the dividend growth rate as discussed in class. Use the most recent annual dividend(the sum of all quarterly dividends in year 2019)as the current dividend and multiply it by 1+g to calculate !.iv)Calculate the cost of equity using the formula and the dividend growth rate calculated above. Alternatively, we can use the CAPM method to compute the cost of equity.

v)Download the companys monthly historical prices during the 4-year period 01/01/2016-12/31/2019from finance.yahoo.com. Make sure they are sorted in the ascending order of dates (oldest to newest). Download the S&P500 (ticker: ^GSPC) monthly historical prices during the same period. Using the adjusted closing price for both series, calculate the monthly returns forthe company and the S&P500. Show a snapshot of your work in this part (5-10 lines, not the entire series) in the appendix.vi)Calculate the variance of the market returns, covariance between market and the company. Then, calculate the companys beta. vii)Use the CAPM formula to calculate the cost of equity. Assume that the riskless rate of 2% and the average market return of 8%.We can compare the costs of equity obtained using two different approaches and determine what to do with them. viii)In many cases, we use the CAPM cost of equity. However, we may also take the average of the two values (cost of equities from (iv) and (vii)). What is the averaged cost of equity?