The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 4% per...

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The earnings, dividends, and stock price of Shelby Inc. areexpected to grow at 4% per year in the future. Shelby's commonstock sells for $28.75 per share, its last dividend was $2.50, andthe company will pay a dividend of $2.60 at the end of the currentyear.
a. Using the discounted cash flow approach, what is its cost ofequity? Round your answer to two decimal places.
b. If the firm's beta is 0.9, the risk-free rate is 6%, and theexpected return on the market is 13%, then what would be the firm'scost of equity based on the CAPM approach? Round your answer to twodecimal places.
c. If the firm's bonds earn a return of 12%, then what would beyour estimate of r_s using theover-own-bond-yield-plus-judgmental-risk-premium approach? Roundyour answer to two decimal places. (Hint: Use the midpointof the risk premium range.)
d. On the basis of the results of parts a through c, what wouldbe your estimate of Shelby's cost of equity? Assume Shelby valueseach approach equally. Round your answer to two decimal places.

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The earnings, dividends, and stock price of Shelby Inc. areexpected to grow at 4% per year in the future. Shelby's commonstock sells for $28.75 per share, its last dividend was $2.50, andthe company will pay a dividend of $2.60 at the end of the currentyear.a. Using the discounted cash flow approach, what is its cost ofequity? Round your answer to two decimal places.b. If the firm's beta is 0.9, the risk-free rate is 6%, and theexpected return on the market is 13%, then what would be the firm'scost of equity based on the CAPM approach? Round your answer to twodecimal places.c. If the firm's bonds earn a return of 12%, then what would beyour estimate of rs using theover-own-bond-yield-plus-judgmental-risk-premium approach? Roundyour answer to two decimal places. (Hint: Use the midpointof the risk premium range.)d. On the basis of the results of parts a through c, what wouldbe your estimate of Shelby's cost of equity? Assume Shelby valueseach approach equally. Round your answer to two decimal places.