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The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to...

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Finance

  1. The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpettos common stock currently sells for $23.00 per share; its last dividend was $2.00; and it will pay $2.14 dividend at the end of current year.
  1. Using the DCF approach, what is its cost of common equity?
  2. If the firms beta is 1.6, the risk-free rate is 9%. And the average return on market is 13%, what will be the firms cost of common equity using the CAPM approach?
  3. If the firms bonds earn a return of 12% and risk premium of 4%, based on the bond-yield-plus-risk-premium approach, what will be the ks?
  4. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpettos cost of common equity?

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