Epley Industries stock has a beta of 1.30. The company just paid an annual dividend of $.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 5.7 percent. The most recent stock price for the company is $74.

a.	Calculate the cost of equity using the discounted cash flow method (Chapter 6). (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

DCF method

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b.	Calculate the cost of equity using the Security Market Line (Chapter 13). (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

SML method

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