(Cost of common stock, retained earnings) MostDef, Inc's common stock has a beta coefficient of 1.5. The market risk premium is 8% and the risk-free rate of interest is 1.5%. MostDef pays $0.65 of cash dividend each quarter for each share of common stock, priced at $75 per share. Dividends are expected to remain constant in the future. a. What is MostDef's component cost of common equity using the dividend discount model? b. What is MostDel's component cost of common equity using the CAPM? c. Compute the arithmetic mean of the two costs from parts a. and b. Provide an argument for using each of the three estimates as its component cost.