#50:

Eaton Electronic Company's treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost o common equity (also referred to as the required rate of return for common equity). Assume: Rf=6%Km=9%=2.2D1=$0.70P0=$15g=6% a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. b. Compute Ke (required rate of return on common equity based on the dividend valuation model). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places