Problem Walk Through Cost of Emuity The saming, dividends and stock ice of Shelby increpected to grow in the Shelbys.com for ham, viewed of the current year 2. Using the discounted cash flow approach, what is its cost of yound your answer to two decimal b. If the firm's bas.. the free and the expected on the market is, then what would be the cost of the course If the firm's bonds earn a return of the what would be your time in the own-bond-detaliste dhe places d. On the basis of the results of us - What would be your estimate of Shelby's cost of otheby valves each woochodowe twee ..ll VZW Wi-Fi 7:49 AM 99% The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 4% per year in the future. Shelby's common stock sells for $21 per share, its last dividend was $2.00, and the company will pay a dividend of $2.08 at the end of the current year. a. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. % b. If the firm's beta is 1.8, the risk-free rate is 7%, and the expected return on the market is 10%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. % c. If the firm's bonds earn a return of 9%, then what would be your estimate of r, using the own-bond-yield-plus-judgmental-risk- premium approach? (Hint: Use the mid-point of the risk premium range.) Round your answer to two decimal places. % d. On the basis of the results of parts a-c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally. Round your answer to two decimal places. %