Stock in Van Buren Industries has a beta of 0.85. The market risk premium is 7.5%, and the risk-free rate is 1%. Van Buren Industries dividend is anticipated to be $3.00 per share in one year, and dividends are expected to grow at a constant rate of 4%. The stocks sell for $75. What is the average of the two estimates of the cost of equity using the security market line and dividend growth model approaches? A) 8.00% B) 9.95% C) 7.69% D) 6.95% E) 7.05%

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