In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Sunny Co. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Sunny Co.'s retained earnings will be sufficient to fund its capital budget in the foreseeable future. The company has a beta of 1.80, the risk- free rate is 6.0%, and the market return is 7.8%. What is Sunny Co.'s cost of equity? O 3.32% O 9.24% O 14.12% O 33.88%