Michalko Corp.
Total Assets	$14,680
Interest-Bearing Debt	$8,124
Average borrowing rate for debt	11.5%
Common Equity:
Book Value	$5,120
Market Value	$25,700
Marginal Income Tax Rate	37%
Market Equity Beta	1.44

Using the information in the table and assuming that the risk-free rate is 4.2% and the market risk premium is 6.2% calculate Michalko's cost of equity capital, using the capital asset pricing model. Please explain and show work.

a. 10.4%

b. 8.9%

c. 6.2%

d. 13.1%