The stock is currently selling for $22 per share, and its noncallable $1,000 par value, 20-year, 1 1% bonds with semiannual payments are selling for $1240. The beta is 1.3, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 40%. Refer to Exhibit 10.1. Based on the CAPM, what is the firm's cost of equity? 11.46% 11.98% 12.49% O 12.88% 13.90%