#7

Maryland Light, a U.S. light manufacturer, is considering an investment in Japan. The dollar cost of equity for Maryland is 13.42%. You are in the corporate treasury department, and you need to know the comparable cost of equity in Japanese yen for a project with free cash flows that are uncorrelated with spot exchange rates. The risk-free interest rates on dollars and yen are r$=4.09% and r=0.95%, respectively. Maryland is willing to assume that capital markets are internationally integrated. What is the yen cost of equity? The yen cost of equity is \%. (Round to two decimal places.)