Question1: Assume that you are a consultant to Magee Inc., and you have been provided with the following data: rRF = 4.00%; RPM = 5.00%; and b = 1.15. Calculate the cost of equity from retained earnings based on the CAPM approach?
Question2: Lanser Inc. hired you as a consultant to help them estimate its cost of capital. You have been provided with the following data: D1 = $0.80; PO = $22.50; and g = 5.00% (constant). Based on the DCF approach, calculate the cost of equity from retained earnings?