Implied growth with $D_1$

Badger Business Machines stock trades at $$53.$ The analyst covering this company believes the current price is fairly

value based on his analysis. He estimates the company will pay a dividend of $$2\mathrm{.}85$ next year, and it is expected to

grow at a constant rate indefinitely. The risk$-$free rate of return is $1\mathrm{.}3\%,$ the market risk premium is $7\mathrm{.}5\%,$ and the

company's beta is $0\mathrm{.}85.$

a$.$ What is the cost of equity?

$\%$

Round your answer to two digits after the decimal point

b$.$ What is the expected capital gains yield?

$\%$

Round your answer to two digits after the decimal point