Cost of Equity Calculation for XYZ Corporation

XYZ Corporation is considering a new project and needs to estimate its cost of equity. The expected earnings per share (EPS) for the next year is projected at $5.00. XYZ’s stock is currently trading at $50. The company has a sustainable growth rate of 5%. Additionally, the company’s recent beta is reported as 1.2, and the risk-free rate is 3% while the market return is expected to be 10%.

Using the Gordon Growth Model (Dividend Discount Model) and the Capital Asset Pricing Model (CAPM), calculate the cost of equity for XYZ Corporation. Based on this calculation, which of the following represents the cost of equity that XYZ Corporation should use in its project evaluation?