Problem 11-1 Cost of Equity (LG11-3) Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 3 percent, and the expected return on the market is 12.50 percent. What is Diddy’s cost of...

Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 3 percent, and the expected return on the market is 12.50 percent.

What is Diddy’s cost of equity?
(Round your answer to 2 decimal places.)