The Cox Corporations balance sheet shows that 1,000,000 shares of common stock are outstanding. Total assets are $26,000,000 and total debt is $10,000,000. The marginal corporate tax rate is 30%. Assume the companys stock trades at $20/share. The next dividend is expected to be $1 and long-term growth is estimated at 5%. Assume that all of the Cox Corporations debt stems from 8% coupon rate bonds that are trading so that their YTM is 9%.

What is the cost of equity?