Berta Industries stock has a beta of 1.25. The company just paid a dividend of $0.40, and the dividends are expected to grow at 5 percent. The expected return on the market is 12 percent, and Treasury bills are yielding 6.1 percent. The most recent stock price for Berta is $78.
a. Calculate the cost of equity using the DCF method. (Round your answer to 2 decimal places. (e.g., 32.16))
DCF method %
b. Calculate the cost of equity using the SML method. (Round your answer to 2 decimal places. (e.g., 32.16))
SML method %