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A portfolio manager is contemplating an investment in the Alpha Company and needs an equity risk premium estimate. The analyst recommending Alpha knows that

A portfolio manager is contemplating an investment in the Alpha Company and needs an equity risk premium estimate. The analyst recommending Alpha knows that the average yield to maturity on Alpha's outstanding bonds is 5.3 percent. Assuming a risk premium of 8.2 percent and a stock beta of 0.7, the cost of equity is closest to: Number % Round your answer to two decimals

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