Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's dividends to grow by 8% forever. Its stock price is $36.6 and its beta is 0.4. The risk-free rate is 2% and the expected return on the market portfolio is 8%.

What is the best guess for the cost of equity? (Need to use both SML and constant growth methods to estimate cost of equity)