Jen is starting an athletic clothing chain and has chosen REI as a comparable. REI has an equity beta of 1.80. REI also has $80M in equity and $40M in debt, which is has a yield of 4%. The expected return of the market is 7% and the risk- free rate is 2%. What is the appropriate discount rate to use for Jens athletic clothes startup?

The discount rate is 8.69%

Please answer this question below in bold and don't use excel. Show work. Thank you.

(Using the information from the previous question) Jens firm is made up of $60M in equity and $20M in debt, which is risk-free. What is the expected return on equity for Jens company?