Given the following information compute a firms cost of equity using the Capital Asset Pricing Model (CAPM).

• Beta = 1.30
• Long-term dividend growth rate = 5%
• Risk-free rate of return = 4.5%
• Dividend expected at the end of year 1 = $2.45
• Market risk premium = 7%
• Current common stock market price = $22.00

Group of answer choices

A. 14.10%

B. 7.75%

C. 13.60%

D. 16.14%