1.) Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4%, and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM?

2.)David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield tomaturity on the companys outstanding bonds is 9%, and the companys tax rate is 40%.Ortizs CFO has calculated the companys WACC as 9.96%. What is the companys cost ofequity capital?