The Kennedy Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Kennedy's bonds yield $10\mathrm{.}28\%,$ and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is $3\mathrm{.}55\%.$ Based on the bond$-$yield$-$plus$-$risk$-$premium approach, Kennedy's cost of internal equity is:

$15\mathrm{.}21\%$

$13\mathrm{.}83\%$

$16\mathrm{.}60\%$

$17\mathrm{.}29\%$

The cost of equity using the discounted cash flow $($or dividend growth$)$ approach

Pierce Enterprises's stock is currently selling for $$32\mathrm{.}45$ per share, and the firm expects its per$-$share dividend to be $$1\mathrm{.}38$ irfone year. Analysts project the firm's growth rate to be constant at $7\mathrm{.}27\%.$ Estimating the cost of equity using the discounted cash flow $($or dividend growth$)$ approach, what is Pierce's cost of internal equity?

$14\mathrm{.}40\%$

$11\mathrm{.}52\%$

$15\mathrm{.}55\%$

$12\mathrm{.}10\%$