DEF Industries has $40,000$ shares of common stock with a beta of $0\mathrm{.}9.$ The company just paid a dividend of $$1\mathrm{.}80,$ and the dividends are expected to grow at $7\%$ per year. The expected return on the market is $15\%,$ and Treasury bills are yielding $8\%.$ The most recent stock price for the company is $$25.$ Ignore all floatation costs. What is the cost of equity based on constant dividend growth model and what is the cost of equity based on CAPM? What is the average cost of equity based on the two methods?

Question $12$ options:

$14\mathrm{.}20\%$; $14\mathrm{.}30\%$; $14\mathrm{.}25\%$

$14\mathrm{.}70\%$; $14\mathrm{.}30\%$; $14\mathrm{.}50\%$

$6\mathrm{.}31\%$; $15\mathrm{.}25\%$; $10\mathrm{.}78\%$

$6\mathrm{.}38\%$; $15\mathrm{.}25\%$; $10\mathrm{.}81\%$