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HESS Inc. wishes to estimate its cost of retained earnings. The firm's beta is 1.25. The rate on 6-month T-bills is 3.25%, and the return

HESS Inc. wishes to estimate its cost of retained earnings. The firm's beta is 1.25. The rate on 6-month T-bills is 3.25%, and the return on the S&P 500 index is 14%. The firm's marginal tax rate is 35%. What is the appropriate cost for retained earnings in determining the firm's cost of capital?

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