Your friend is selling 100K shares at $1 each in his new, specialized company, OppCo. This represents 100% of OppCo's shares. OppCo will invest the paid in capital for one year, with the expectation (hope) that it will be able to return shareholders $1.25 per share after one year, when the firm will be closed down.

What is OppCo's cost of equity capital, r_E? Round your answer to two decimal places.