Aluminum maker Alcoa has a beta of about 1.98, whereas Hormel Foods has a beta of 0.4. If the expected excess return of the market portfolio is 4%, which of these firms has a higher equity cost of capital, and how much higher is it?

1: Alcoa's equity cost of capital is

(Round to two decimal places.)

2: Hormel's equity cost of capital is

(Round to two decimal places.)

3: Therefore, Alcoa has the higher equity cost of capital by

percentage points.(Select from the drop-down menus and round to two decimal places.)