The Reef Corporation has an opportunity to sell shark repellant. Oscar, the CEO, would like Sykes, the vice president, to evaluate the project. Oscar owns all $50,000$ outstanding shares of the Reef Corporation. Oscar plans to receive $$1\mathrm{.}3$ in dividends at the end of the year. Oscar plans to grow the dividends at $8\%$ a year. Frankie, an independent financial analyst, has estimated that the bonds should sell for $$1075.$ Frankie has estimated that the stock should sell for $$17\mathrm{.}75.$ Frankie has estimated the beta to be $1\mathrm{.}25.$ Frankie estimates the market will return $11\%.$ Lino, the godfather, will have an antidote to the repellant after five years. Don Feinberg owns all $600$ outstanding bonds. Don Feinberg receives $$35$ interest payments every six months. Lenny, the operations manager, has estimated that they will need $5$ pieces of equipment that cost $$200,000$ each. Installation will be a flat $$90,000.$ Lenny estimated that they will need $$155,000$ more in inventory. Lenny believes that the equipment will be worth $$355,000$ after the five$-$year run. Lenny has estimated the cost will be $28$ per unit. Lenny estimates that fixed cost will be $$30,000.$ Lola, the marking manager, believes the repellant will sell for $$1.$ Lola believes the demand will be able to sell $350,000$ in year$1$; $450,000$ in year $2$; $600,000$ in year $3$; $550,000$ in year $4$; and $450,000$ in year $5.$ Angie, the CFO, says the equipment will fall under a $5-$year MACRS. Angie estimates that accounts payable will increase by $$60,000$ and accounts receivables will increase by $$50,000.$ Angie has estimated the tax rate as a flat $40\%.$ The Reef Corporation bonds mature in $12$ years. The par value on the bonds is $$1000.$ The coupon rate is $7\%$ on the bonds. Treasury bonds yield $4\%.$ The bond risk premium is $6\%.$what is the cost of equity using the bond risk premium method?