Consider the following capital structure for Sea Shore Corporation. The company has a publicly-traded bond issue, preferred shares, and common equity in its capital structure. The firms tax rate is 35%. The risk-free rate is 7%.

Details on the components of the capital structure are listed below.

Debt:	Fixed coupon-paying bond issue
	$80 million par
	6% semiannual coupon
	Remaining maturity of 10 years
	Currently priced in market at 105% of par value
Preferred equity:	$100 million par
	6% annual coupon
	Each $1,000 par issue is currently priced at $925.
Common equity:	10 million shares outstanding
	Current share price: $40
	Stock beta: 0.5
	Market risk premium = 10%

Using CAPM, Sea Shores cost of common equity is closest to: