You have been asked to estimate the cost of equity of TeleSoft Inc., an Israeli software form that gets all of its revenues in the United States. The company is listed on the Tel Aviv Exchange. The 14 largest investors are all diversified mutual funds in the United States. You have run three regressions, using the last 5 years of returns for each: RTelesoft = 0.55% +0.80 RTel Aviv Exchange RTelesoft = -0.12% + 1.60 RS&P RTelesoft = -0.04% +1.00 RComputer Software Index The current U.S. Treasury bond rate is 4.25% and the Israeli Government has ten-year shekel denominated bonds with an interest rate of 8%. Over the last 80 years, the equity risk premium has been 4.75% in the United States and is unavailable for Israel. Estimate the U.S. $ cost of equity for Telesoft. 0 4.25% 8.75% 4.75% 13.90% O 11.85%