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Quantitative Problem: Barton Industries estimates its cost of common equity by using three approaches: the...

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Quantitative Problem: 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, D, to be $2.20 and it expects dividends to grow at a constant rate 9 -3.8%. The firm's current common stock price, Po, is $25.00. The current risk-free rate, tas-4.8%; the market risk premium, RPM, 6.5%, and the firm's stock has a current beta, b. - 1.30. Assume that the firm's cost of debt, is 8.45%. The firm uses a 3.5% 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 nisk premium DCF cost of equity: 90 What is your best estimate of the firm's cost of equity? Select

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