The return on the market is 11%. A firm's beta is 1.4, and the risk-free rate is 6%. The stock is currently selling for $18 and the next dividend is expected to be $1.75. The firm's growth rate is 5%. The pre-tax cost of debt is 10% and the equity risk premium is 5%. Estimate the cost of equity by taking an average of the three methods to determine the cost of equity.

Question 1 options:

15.0%

14.2%

14.7%

11.7%