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XYZ, Inc. is considered as being above average risk and so its market equity beta is 1.8. Currently, the default free rate on long term

XYZ, Inc. is considered as being above average risk and so its market equity beta is 1.8. Currently, the default free rate on long term govt. securities is 4% and the market risk premium is 9%. What is the cost of equity for XYZ?

12.8%

12.2%

12.6%

20.2%

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