K-Far Stores has launched an expansion program that should result in the saturation of the Bay Area marketing region of California in six years. As a result, the company is predicting a growth in earnings of 12 percent for three years and 6 percent for the fourth through sixth years, after which it expects constant earnings forever. The company expects to increase its annual dividend per share, most recently $2, in keeping with this growth pattern. Currently, the market price of the stock is $25 per share. Estimate the company's cost of equity capital