Pan American Airlines' shares are currently trading at $73.63 each. The market yield on Pan Am's debt is 9% and the firm's beta is 0.4. The T-Bill rate is 2.5% and the expected return on the market is 7.5%. The company's target capital structure is 30% debt and 70% equity. Pan American Airlines pays a combined federal and state tax rate of 38%. What is the estimated cost of common equity, employing the constant growth dividend discount model? Assume that Pan Am pays annual dividends and that the last dividend of $2.03 per share was paid yesterday. Pan Am started paying dividends 5 years ago. The first dividend was $1.46 per share.

Employing the constant growth dividend discount model, the estimated cost of common equity for Pan Am is ???%.

(Round to two decimal places.)