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Business, 30.11.2019 02:31 xxtonixwilsonxx

Barton industries estimates its cost of common equity by using three approaches: the capm, the bond-yield-plus-risk-premium approach, and the dcf model. barton expects next year's annual dividend, d1, to be $2.20 and it expects dividends to grow at a constant rate g = 4.4%. the firm's current common stock price, p0, is $25.00. the current risk-free rate, rrf, = 4.4%; the market risk premium, rpm, = 6.1%, and the firm's stock has a current beta, b, = 1.40. assume that the firm's cost of debt, rd, is 10.36%. the firm uses a 3.1% risk premium when arriving at a ballpark estimate of its cost of equity using the bond-yield-plus-risk-premium approach. what is the firm's cost of equity using each of these three approaches? round your answers to two decimal places. capm cost of equity: % bond yield plus risk premium: % dcf cost of equity: % what is your best estimate of the firm's cost of equity?

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