The earnings, dividends and stock price of Shelby Inc. are expected to grow at 6% per year in the future. Shelby's common stock sells for $33 per share, its last dividend was $3.00 and the company will pay a dividend of $3.18 at the end of the current year. Please answer question D, based on the given answers A-C.

(a) Using the discounted cash flow approach what is the cost of equity? = 15.6%

(b) If the firms beta is 1.4, the risk free rate is 4% and the expected return on the market is 10%, then what would be the firm's cost of equity based on the CAPM approach? = 12.4%

(c) if the firm's bonds earn a return of 11.5% then what would be your estimate of rs using the own bond yeild plus judgement risk premium approach? = 17.5%

(d) on the basis of the results of parts a through c what would be your estimate of Shelbys cost of equity?