Mackenzie Company has a price of $32 and will issue a dividend of $2.00 next year. It has a beta of 1.6, the risk-free rate is 5.6%, and the market risk premium is estimated to be 4.7%.

a. The equity cost of capital for Mackenzie is ___%. (Round to two decimal places.)

b. Under the CGDM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part

(a)? The expected growth rate for dividends is ___%. (Round to two decimal places.)