PLEASE SHOW WORK

An analyst gathered the following information about a private company and its publicly-traded competitor:

Comparable Companies	Tax Rate	Debt/Equity	Equity Beta
Private company	30%	1	N.A.
Public company	35%	0.9	1.75

A. Using the pure-play method to estimate the equity beta for the private company

B. The analyst estimated a risk free rate of 4% and expected rate of return on the market portfolio of 10%. What is the estimated cost of equity of this private company?

C. If the analyst used discounted dividend model to estimate the cost of equity. The analyst predicted that the expected dividend payout rate is 40%, expected return on equity (ROE) is 15%, and next years dividend is $2. The current market price of a share of common stock is $28. What is the estimate the cost of equity?