Intro

Runtan Inc. has just paid an annual dividend of $$0\mathrm{.}45$ per share. Analysts expect

the firm's dividends to grow by $3\%$ forever. Its stock price is $$35\mathrm{.}6$ and its beta is

$1\mathrm{.}4.$ The risk$-$free rate is $2\%$ and the expected return on the market portfolio is $8\%.$

Part $1$

What is the best guess for the cost of equity?