Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data: D0 = $1.70; P0 = $20.00; and g = 8.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? Do not round your intermediate calculations.

a. 9.91%

b. 17.18%

c. 9.18%

d. 16.50%

e. 15.87%

You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D₁ = $2.20; P₀ = $75.00; g = 6.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?

a. 8.63%

b. 9.09%

c. 9.27%

d. 8.79%

e. 8.93%