Newark Co. is based in the U.S. About 30% of its sales are from exports to Portugal. Newark Co. has no other international business. It finances its operations with 40% equity and the remainder of funds with dollar-denominated debt. It borrows its funds from a U.S. bank at an interest rate of 9 percent per year. The long-term risk-free rate in the U.S. is 6 percent. The long-term risk-free rate in Portugal is 11 percent. The stock market return in the U.S. is expected to be 13 percent annually. Newark's stock price typically moves in the same direction and by the same degree as the U.S. stock market. Its earnings are subject to a 20% corporate tax rate.

Estimate the cost of capital to Newark Co.