Apple Industries stock has a beta of 1.20. The company just paid a dividend of $.50, and the dividends are expected to grow at 6% forever. The expected return on the market is 11%, and the risk free rate is 6.2%. The current stock price of the company is $79 per share.

a. Calculate the cost of equity using the dividend growth model. (5 points)

b. Calculate the cost of equity using the CAPM method. (5 points)