You are estimating the implied equity premium. Assuming that currently the S&P 500 is trading at 3200 and the risk-free rate is 3%. The average dividend payout ratio is 2.5% and the average stock buyback is 2.5%. Assume that the average growth rate for earnings will 5% for next year (year 1), 6% for the year after (year 2), and 5.5% for the three years after (year 3, 4, and 5); after year 5, the growth rate will drop to a lower constant level forever.