A firm has a capital structure of 100% equity. An analyst wants to estimate the current cost of capital for the firm. He has collected some financial data shown in the table below:

FINANCIAL INSTRUMENT RETURN OR YIELD TO MATURITY

90-day Treasury Bill 1.29%

S&P 500 Market Index 6.96%

The beta for the firm is 1.27.

The firm is considering a capital budgeting project that will create a cash flow next year of $492,479.00. The project cash flows will grow by 4.00% each year for a 10.00-year period, and the cost of the project is $3,189,416.00 today.

What is an estimate for the current cost of capital?

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Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))