Bearcat Inc. has the following situation: The company has an outstanding bond issue with 9 years remaining to maturity. The bonds have a 8% coupon, and are trading at $1113. Interest is paid semi-annually. The company's common stock currently sells for $38 a share. The company's most recent dividend was $2.50 a share. Dividends are expected to grow at a constant rate of 3 percent per year. The company's tax rate is 40 percent. The company is targeting a debt-to-equity ratio of .9. Assume the company does not use short-term debt. Suppose that the common stock of Bearcat Inc. has a beta of 1.70. The risk-free rate of return is 4 percent and the market risk premium is .07.

Using data from the first section of the problem, plus this new information, what is the new estimate of the cost of the common stock? (Note, you are not being asked to recalculate the WACC; only the cost of equity)