The Market Rate of Return Is 12

Multiple Choice

The market rate of return is 12.65 percent and the risk-free rate is 3.1 percent.Galaxy Co.has 15 percent more systematic risk than the overall market and has a dividend growth rate of 3.75 percent.The firm's stock is currently selling for $53 a share and has a dividend yield of 4.53 percent.What is the firm's average cost of equity?

A) 11.18 percent
B) 12.36 percent
C) 10.87 percent
D) 17.33 percent
E) 12.16 percent