Slack Company's financial manager is estimating the cost of equity and prefers to use the average of the CAPM model and the dividend growth model. The following information is available. The risk-free rate is 5%, the expected return on the market is 16%, and the beta of the firm is 1.3. The company plans to pay $1.75 in dividends next year and dividend growth is expected to be 6%. The price of the stock is currently $13.67. What is the average cost of equity?