An analyst has collected data about Devers Co. and a world market index. The index implies an equity risk premium of 5 percent, and Devers has a beta of 1 with respect to the index. When the residuals from the beta regression are collected and included in the regression model as an additional factor a segmented market risk premium of 13% is calculated and the segmented beta is 0.8. The risk free rate is 3%. If Devers is estimating the cost of equity in segmented markets what is the appropriate cost of equity.