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Finance

Floyd Industries stock has a beta of 1.30. The company just paid a dividend of $.30 and the dividends are expected to grow at 4 percent per year. The expected return on the market is 13 percent, and Treasury bills are yielding 5.1 percent. The most recent stock price for the company is $68.

a.

Calculate the cost of equity using the dividend growth method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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