Eaton Electronic Company$$s treasurer uses bothProblem $11-30($Algo$)$ Capital asset pricing model and dlvidend valuation model $[$LO$11-3]$

Eaton Electronic Compony's tressurer uses both the copitol osset pricing model and the dividend voluotion model to compute the cost

of common equity $($slso referred to as the required rate of return for common equity$).$

Assume:

$R_f=5\%$

$K_m=7\%$

$=2\mathrm{.}1$

$D_1=$$$0\mathrm{.}95$

$P_0=$$$21$

$g=5\%$

a$.$ Compute $K_f($required rote of return on common equity bosed on the copitsl ssset pricing model$).$

Note: Do not round intermedlate calculations. Input your answer as a percent rounded to $2$ decimal places.

$K$

$\%$

b$.$ Compute $K_c($required rate of return on common equity bosed on the dividend volustion model$).$

Note: Do not round intermedlate calculations. Input your answer as a percent rounded to $2$ decimal places.

Ke

$\%$ the capital asset pricing model and the dividend valuation model to compute the cost of common equity $($also referred to as the required rate of return for common equity$).$ Assume: Rf $=7$