Pan American Airlines' shares are currently trading at $74.93 each. The yield on Pan Am's debt is 9%

and the firm's beta is 1.6. The T-Bill rate is 5% and the expected return on the market is 9.5%. The company's target capital structure is 60% debt and 40% equity. Pan American Airlines pays a combined federal and state tax rate of

45%. What is the estimated cost of common equity, employing the Capital Asset Pricing Model (CAPM)?

The estimated cost of common equity for Pan American Airlines is__%. (Round to two decimal places.)