McCann Catching, Inc. has 3.00 million shares of stock outstanding. The stock currently sells for $12.55 per share. The firms debt is publicly traded and was recently quoted at 92.00% of face value. It has a total face value of $11.00 million, and it is currently priced to yield 9.00%. The risk free rate is 2.00% and the market risk premium is 8.00%. Youve estimated that the firm has a beta of 1.25. The corporate tax rate is 40.00%.

The firm is considering a $41.01 million expansion of their production facility. The project has the same risk as the firm overall and will earn $11.00 million per year for 8.00 years.

What is the cost of equity?