The stock price today is $235.53, Beta () is 1.29 and it is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00). Current EPS for FDX is $18.84, since dividends (Di) are expected to be $3.00, the dividend payout ratio (p) is $3.00/$18.84 = 15.92%. Assume a payout ratio (p) of 0.1592 (15.92%) for the foreseeable future, and that FDX will invest retained earnings to yield 12%, the estimate that the future growth rate for FDX is g = (1-0.1592)*12% = 10.09% (g=10.09%). a. What is the cost of retained earnings estimated, at this time, for FDX using the DCF approach? rFDX = Di/P, +g= = b. Using the 10-year US Treasury Yield as a risk-free rate (rif), what is the projected cost of FDX retained earnings using the CAPM? https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield Date 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 10/29/21 0.06 0.08 0.05 0.07 0.15 0.48 0.75 1.18 1.44 1.55 1.98 1.93 PFDX = Prf + [5.5]Brdx c. Explain why the two models give different values for rFox and which models estimated cost of equity capital will you use. The stock price today is $235.53, Beta () is 1.29 and it is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00). Current EPS for FDX is $18.84, since dividends (Di) are expected to be $3.00, the dividend payout ratio (p) is $3.00/$18.84 = 15.92%. Assume a payout ratio (p) of 0.1592 (15.92%) for the foreseeable future, and that FDX will invest retained earnings to yield 12%, the estimate that the future growth rate for FDX is g = (1-0.1592)*12% = 10.09% (g=10.09%). a. What is the cost of retained earnings estimated, at this time, for FDX using the DCF approach? rFDX = Di/P, +g= = b. Using the 10-year US Treasury Yield as a risk-free rate (rif), what is the projected cost of FDX retained earnings using the CAPM? https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield Date 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 10/29/21 0.06 0.08 0.05 0.07 0.15 0.48 0.75 1.18 1.44 1.55 1.98 1.93 PFDX = Prf + [5.5]Brdx c. Explain why the two models give different values for rFox and which models estimated cost of equity capital will you use