Please use excel to solve.

1 2 11. You are considering investing in Starbucks Bond or Stock? The Starbucks bond matures in 10 years and your yield to maturity is 2.4%. Starbucks current stock price is $115, 3 with a beta of 0.88 and dividend that will be paid next year of $1.80. Assume that a 10 year US Govt Bond has an yield of 1.65%. 4 5 A). Calculate the Cost of Equity for Starbucks using CAPM model? 6 B). Compare the Starbucks Bond and the US Govt Bond, what is the reason for the difference in the yield? C). Calculate the Starbucks Stock price using the Gordon's growth model/growing perp. formula assuming a 3% dividend growth rate? Should you buy the stock based on this 7 calculated value? Why? 8 D). Calculate the Starbucks Stock price using the Gordon's growth model/growing perp. formula assuming a 4% dividend growth rate? Should you buy the stock based on this 9 calculated value? Why? 10 E). Compare the stock and bond of Starbucks, what is a better investment? Why? 11 12