You are forecasting the returns for Skysong Company, a plumbing supply company, which pays a current dividend of $ 9.70. The dividend is expected to grow at a rate of 2.7 percent. You have identified two public companies, Concord and Marigold, which appear to be comparable to Skysong. Concord has the same total risk as Skysong and a beta of 1.05. Marigold, in contrast, has a very different total risk but the same market risk as Skysong. Marigolds beta is 0.85. The market risk premium is 4.35 percent and the risk-free rate is 0.85 percent.

1) Determine the required return for Skysong using the appropriate beta. (Round answer to 3 decimal places, e.g. 3.361%.)