1.A MNC is trying to estimate its cost of equity for inclusion in its calculations of the WACC. The company uses the following relevant information. It has just paid a dividend of $2.2 per share. The constant growth estimated for the company is 6% per year. The common stock of the company is selling for $16 per share. The marginal tax rate is 40%. The cost of equity based on this information is_______.

a)20.58%

b)12.35%

c)13.75%

d)19.75%

e)14.58%

2.A MNC is trying to estimate its cost of equity for inclusions on its calculations of the WACC. The company collects the following information: the beta of the company's equity is 1.12. The risk-free rate is 6% and the market risk premium is 12%. The company's marginal tax rate is 40%. The cost of equity is:

a)12.72%

b)13.44%

c)11.66%

d)19.44%

e)7.78%