Your company has always assumed a cost of common equity capital of about 12.0%. An intern you supervise at the firm recently gathered the information below, and you now want to run a check on that long-standing assumption.

What is your good estimate of R_e?

• the yield right now on a 5-year US Treasury note: 3.87%
• total liabilities: $13 million
• total shareholders' equity: $26 million
• company's stock beta: 1.55
• 5-year average return on the S&P 500: 11.23%
• YTM on the company's only bond issue: 4.20%