Question 33

Suppose you are trying to estimate the after tax cost of equity for a firm as part of the calculation of the Weighted Average Cost of Capital (WACC). If the risk-free rate is 4.5%, the expected market risk premium is 5.2%, the beta is 1.5 for this firm's equity, and the corporate tax rate is 31%, what would be the expected after tax cost of equity for this firm using CAPM? (Answer to the nearest tenth of a percent, but do not use a percent sign).