Shoreline Physicians Group is a for-profit group practice in the state of South Carolina. Its dividends are expected to grow at a constant rate of 7 percent per year into the foreseeable future. The firm's last dividend (D0) was $2, and its current stock price is $23. The firm's beta coefficient is 1.2; the rate of return on 20-year T-bonds is 8 percent; and the expected rate of return on the market, as reported by a large financial services firm, is 14 percent. The firm's target capital structure calls for 40 percent debt financing, the interest rate required on the business's new debt is 10 percent, and its tax rate is 40 percent.

1. What is Shoreline's cost of equity estimate according to the DCF method?
2. What is the cost of equity estimate according to the CAPM?
3. On the basis of your answers to Parts a. and b., what would be final estimate for the firm's cost of equity?
4. What is estimate for the firm's corporate cost of capital?