The Jackson Company is closely held and, therefore, cannot generate rellable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Jackson's bonds yield 10.28%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 5.89. Based on the bond-yleld-plus-risk-premlum approach, Jackson's cost of internal equity is: 15.36%17.79%20.21%16.17% The cost of equity using the discounted cash fow (or dividend growth) approach Kirty Enterprisei's stock is currently seling for $45.56 per share, and the firm expects its per-share dividend to be $1.38 in one year. Analysts project the firm's growth rate to be constant at 7.27\%. Estimating the cost of equity using the discounted cash fow (or dividend growth) approach, what is kirby's cost of internal equity? 13.91% 9.79% 10.30% 10.82% 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 reasized gromth rate, and apply it to the future. - Locate and appiy an expected future growth rate prepared and published by security analysts. - Uwe the retention growth model. Suppose Kitty is currenty distrouting 60of of its eamings in the form of cash dividends. th has also historicaly generated an average refum on equity (pot) of 14\%, Kitby' estimated growth rate is