Stock in CDB Industries has a beta of .95. The market risk premium is 7 percent, and T-bills are currently yielding 4.0 percent. CDBs most recent dividend was $2.40 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely. The stock sells for $46 per share.

Required:

Using the CAPM, what is your estimate of CDBs cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Cost of equity

%

Using the dividend discount model, what is your estimate of CDBs cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Cost of equity

%

What is your best estimate of CDBs cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Cost of equity

%