The current risk free rate of return ( fuy ) is 3.86% while the maket risk premium is 5.75%. The Allen Company has a beta of 0.92 . Usang the capital asiet prioing riodel (CNPM) approach, Alien's cost of equity is The cost of equity using the bond vield plus risk premium approach The Taylor Company is closely held and, therelore, canot generate reliable inputs with which to use the capM method for essimatimg a compary's cont of internal equity. Taylor's bonds yield 10.28%, and the firm's analysts estimate that the firm's risk premium on its stock over its boinds is 4.95%. Based on the bond yiedd-plus risk-perenium approach, Taylor's cost of internal equity b: 16,75% 15.23% 14.47% The cost of equity using the discounted cash flow (or dividend growth) approach project the firms growth rate to be constant at 5,72\%, tstimating the cost of equity using the discounfed cash flow (or devidend growth) approach, what is Johnson's cost of internal equity? 20.07% 15.6r% 1487% The cost of equity using the discounted cash flow (or dividend growth) approach Johnson Enterprises's stock is currently selling for $25.67 per share, and the firm expects its per-share dividend to be $2.35 in one year. Analysts project the firm's growth rate to be constant at 5.72%. Estimating the cost of equity using the discounted cash flow (or dividend growth) approach, what is Johnson's cost of internal equity? 20,07% 15.6+% 14.87% 14,13% Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three available methods to generate such an estimate: - Carry forward a historical realized growth rate, and apply it to the future. - Locate and apply an expected future growth rate prepared and published by security analysts. - Use the retention growth model. Suppose Johnson is currently distributing 60% of its earnings in the form of cash dividends, It has also historically generated an average return on. equity (ROE) of 24%. Johinson's estimated growth rate is \%