Bonds: The company issued 240,000 bonds. The bonds have a $1,000 face value with 7.5% coupons with annual payments, 20 years to maturity, and currently sell for $940. The marginal tax rate is 6%. Equity: The company has 9,000,000 shares of (common) stock outstanding, selling for $71 per share. The companys beta is 1.2, the risk free rate is 1%, and the market risk premium is 10%.

What is the cost of equity?