1.To estimate the cost of capital, you have been provided with the following data: rRF = 5.00%; the market return is 8.00%; and Beta = 1.5. Based on the CAPM approach, what is the cost of equity?
a) 5.0%
b) 9.5%
c) 10.5%
d) 13.0%
2. Assume that you have been provided with the following data: D1 = $1.30; P0 = $32.50; and g = 5.0% (constant). What is the cost of equity based on the Dividend Growth Model?
a) 8.06%
b) 10.06%
c) 9.00%
d) 12.0%