To estimate the cost of equity for Visa, you obtained the historical stock information of Visa as following. The stock price listed for Visa is $ XXXXXXXXXXThe book value per share of Visa is $17.89....

To estimate the cost of equity for Visa, you obtained the historical stock information of Visa as following. The stock price listed for Visa is $254.61. The book value per share of Visa is $17.89. The market capitalization of Visa is $40.96 billion. The number of stock shares outstanding is 160.87 million. The most recent dividend payout is $0. The beta for Visa is 1.19. The yield on three-month Treasury bills is 0.36%. The expected market return is 6.36%.

1. Can you use the dividend discount model in this case to estimate the cost of equity for Visa ? If so, what is the cost of equity for Visa ? If not, why?

2. Can you use the CAPM model in this case to estimate the cost of equity for Visa? If so, what is the cost of equity for Visa ? If not, why? (Please show your work in the blank below. )