unit 6 question 19 Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-y

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unit 6 question 19
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 = 5.0%. The firm's current common stock
price, P0, is $20.00. The current risk-free rate,
rRF, = 4.7%; the market risk premium, RPM, =
5.9%, and the firm's stock has a current beta, b, = 1.25. Assume
that the firm's cost of debt, rd, is 17.03%. The firm
uses a 2.9% 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.