You have the following information for a Croatian company

	Revenue (Croatian Kuna)	CDS spread	Standard Dev of gov't bond	Standard Deviation of Stock Market
EU (excluding Croatia)	120	0.5%	4%	8%
South-easter Europe	180	3%	9%	14%
Croatia	250	2%	7%	12%

German Euro bond rate = 0.50%. Croatian Gov't Bond, in local currency Kuna has a rate of 4%. Kuna's credit rating is 2%, the same as implied by the CDS spread.

Estimate the equity risk premium for this company if a mature market such as US or Germany has an ERP of 5%

a.

12.36%

b.

9.88%

c.

7.24%

d.

8.30%