Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital The balance sheet and some other information are provided below Assets Current assets $38,000,000 Net plant, property, and equipment $101,000,000 Total assets $139,000,000 Liabilities and Equity Accounts payable $10,000,000 Accruals $9,000,000 Current liabilities $19,000,000 Long term debt (40,000 bonds, $1,000 par value) $40,000,000 Total liabilities $59,000,000 Common stock (10,000,000 shares) $30,000,000 Retained earnings $50,000,000 Total shareholders' equity $80,000,000 Total liabilities and shareholders' equity $139,000,000 The stock is currently selling for $26 70 per share, and its noncallable $1,000 00 par value, 25 year, 12 00 bonds with semiannual payments are selling for $912 28 The beta is 1 28, the yield on a 6 month Treasury bill is 2 00 , and the yield on a 25 year Treasury bond is 4 00 The required return on the stock market is 11 00 , but the market has had an average annual return of 14 00 during the past 5 years The firm's tax rate is 25 Based on the CAPM, what is the firm's cost of equity

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Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and

Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets

Current assets	$38,000,000
Net plant, property, and equipment	$101,000,000
Total assets	$139,000,000

Liabilities and Equity

Accounts payable	$10,000,000
Accruals	$9,000,000
Current liabilities	$19,000,000
Long-term debt (40,000 bonds, $1,000 par value)	$40,000,000
Total liabilities	$59,000,000
Common stock (10,000,000 shares)	$30,000,000
Retained earnings	$50,000,000
Total shareholders' equity	$80,000,000
Total liabilities and shareholders' equity	$139,000,000

The stock is currently selling for $26.70 per share, and its noncallable $1,000.00 par value, 25-year, 12.00% bonds with semiannual payments are selling for $912.28. The beta is 1.28, the yield on a 6-month Treasury bill is 2.00%, and the yield on a 25-year Treasury bond is 4.00%. The required return on the stock market is 11.00%, but the market has had an average annual return of 14.00% during the past 5 years. The firm's tax rate is 25%. Based on the CAPM, what is the firm's cost of equity?