The Taylor Company s ciosely held and, therafore, cannot generate reliable inputs with which to use the CAPM method for est nating a co p ary s ost of internal equity. Taylor's bonds yield 11.52%, and the firm's analysts stimate that the firm's risk premium on its stock over its bonds is 3.55%. Based on the bond-yeld-pus-risk-premium approacdh, Taylors cost of internal equity is: 18.08% 14.32% 15.07% 18.84% The cost of equity using the discounted cashflow (or dividend growth) approach Grant Enterprises's stock is arenty selin or s45.56 per share, and the firm expects its per share dividen tolbe $2.35 in one year. Analysts project the firm's growth rate to be constant at 5.72%. Using the cost of equity using the discounted cashfow(or dividend growth) approach, what is Grant's cost of interal euity? 10.34% O 11.42% o 13.60% 10.88% Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use n 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 appl . Locate and apply an expected future growth rate prepared and published by securty analysts . Use the retention growth model. Suppase Grant is currently distributing 65.00 of ts earnings in the form of cash dividends.It has als historically generated an average return on equity (ROE) of 16.00. Grant's estimated growth rote is