(Growth rate in stock dividends and the cost of equity) In March of this past year, Manchester Electric (an electrical supply company operating throughout the southeastern United States and a publicly held company) was evaluating the cost of equity capital for the firm. The firm's shares are selling $59.48 for a share; it expects to pay an annual cash dividend of $2.07 a share next year, and the firm's investors anticipate an annual rate of return of 16%

. a. If the firm is expected to provide a constant annual rate of growth in dividends, what rate of growth must the firm experience?

b. If the risk-free rate of interest is and the market risk premium is , what must the firm's beta be to warrant an expected rate of return on the firm's stock?