Kmart shares have a beta of 1.05. The company has just paid a dividend of $1.10, and the dividends are expected to grow at 2.5%. The expected return of the market is 9% and the risk-free rate is 1.5%. The most recent share price for Kmarts shares is $51. a. Calculate the cost of equity using the dividend growth model method. b. Calculate the cost of equity using the SML method. c. Why do you think your estimates in a and b are so different?