Your company has always assumed a cost of common equity capital of about 10%. 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 Re?

• 5-year average return on the S&P 500: 9.5

• YTM on the companys only bond issue: 4.2%

• The Yield right now on a 5-year US Treasury note: 2.65%

• Total liabilities: $87 million

• Total shareholders equity: $118 million

• Companys stock beta: 1.85