Suppose that Wonka Chocolates is expected to pay an annual dividend of $1.37 per share next year. There has been steady growth in dividends of 2.2 percent each year, and investors expect that to continue. The current stock price is $14.25. What is the cost of equity?

Now, suppose the company has an equity beta of 0.72, and the current risk-free rate is 3.2 percent. If the expected market return is 11.7%, what is the cost of equity?