The market rate of return is 10.8 percent and the risk-free rate is 4.45 percent. Galaxy Co. has 17 percent more systematic risk than the overall market and has a dividend growth rate of 5.5 percent. The firm's stock is currently selling for $39 a share and has a dividend yield of 3.8 percent. What is the firm's cost of equity?
- 10.87 percent
- 10.59 percent
- 12.19 percent
- 11.27 percent
- 9.45 percent