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 4.5 percent. The most recent stock price for Floyd is $62.
a. Calculate the cost of equity using the DDM method. b. Calculate the cost of equity using the SML method.
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