The following data pertains to Zolar Corp., a manufacturer of ball bearings (dollar amounts in millions).
|Average Pre-tax borrowing cost||11.5%|
|Income Tax Rate||35%|
|Market Equity Beta||1.24|
Assuming that riskless rate is 4.2% and the market premium is 6.2%, calculate Zolar’s cost of equity capital (i.e. the required rate of return on equity).