A. Now calculate the cost of common equity from retained earnings, using the CAPM method. :______%

B. What is the cost of new common stock based on the CAPM? (Hint: Find the difference between r_e and r_s as determined by the DCF method, and add that differential to the CAPM value for r_s.) : _______%

Skye's earnings per share last year were $3.50. The common stock sells for $65.00, last year's dividend ( D0) was $2.60, and a flotation cost of 11% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual re of stock pays a dividend of $3.60 per share, and its preferred stock sells for $30.00 per share. The firm's before-tax cost of debt is 12%, and its marginal tax rate is 25%. The firm's currently outstanding 12% annual coupon rate, long-term debt sells at pare value. The marke is 6%, and Skye's beta is 1.662. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1.75 million. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Round your answers to two decimal places