#3 ch 11

Cost of Equity: CAPM Booher Book Stores has a beta of 0.8. The yield on a 3month T-bill is 5% and the yield on a 10 -year T-bond is 7%. The market risk premium is 6.5%, and the return on an average stock in the market last year was 14%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places. %