Estimating Cost of Equity Using CAPM

XYZ Corporation is considering its cost of equity for the upcoming capital budgeting decisions. The company has a beta of 1.2, the expected market return is 10%, and the risk-free rate is currently at 3%. Using the Capital Asset Pricing Model (CAPM), what is the estimated cost of equity for XYZ Corporation?

Recall that the CAPM formula is:

Cost of Equity = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)