In 2013, Keenan Company paid dividends totaling $3,600,000 on net income of $10.8million. Note that 2013 was a normal year and that for the past 10 years earnings have grown at constant rate of 10% However, in 2014 earnings are expected to jump to $14.4 million and the firm expects to have a profitable investment opportunities of $8.4million. It is predicted that Keenan will not be able to maintain the 2014 level of earnings growth because the high 2014 earnings level is attributable to an exceptionally profitable new product line introduced that year. After 2014 the company will return to its previous 10% growth rate. Keenan's target capital structure is 40% debt and 60% equity.

C. Assume that investors expect Keenan to pay total dividend of $9,000,000 in 2014 and to have the dividend grow at 10% after 2014. The stock's total market value is $180 million. What is the company's cost of equity?