The stock market data is given in the following table.

Correlation Coefficients

Telmex Mexico World SD$(\%)$ R$$

$(\%)$

Telmex $1\mathrm{.}001\mathrm{.}501\mathrm{.}0018?$

Mexico $1\mathrm{.}001\mathrm{.}201514$

World $1\mathrm{.}001012$

The above table provides the correlations among Telmex, a telephone or communication company located in Mexico, the Mexico stock market index, and the world market index, together with the standard deviations $($SD$)$ of returns and the expected returns $($ R$).$ The risk$-$free rate is $7\%.$

Required:

Suppose the Mexican stock market is segmented from the rest of the world. Using the CAPM paradigm, estimate the equity cost of capital of Telmex.