AU (This information is used for problems 20-25) The Envelope Company has the following liabilities and equity Liabilities and Stockholder's Equity Accounts payable 550 Accruals 400 Short Term Notes Payable 1,100 Current Liabilities 2,050 Long-Term Bank Financing 2,000 Total Liabilities 4,050 Stockholder's Equity 3,250 Total Liabilities and Equity 7,300 The risk free rate of return is 3.0%. The market rate of return is 9.5%. The Beta is 1.2. The P/E ratio is 7.1. The stock price is $14.80. The last annual dividend was $0.60. This dividend is expected to grow 4.5% per year in the future. There are 255 shares of common stock outstanding. Envelope's tax rate is 25%. The current rate (YTM) on both its short term notes payable and long term bank financing is 5.3%. The book value of Envelope's debt is equal to its market value. The risk premium over Envelope's corporate debt is estimated to be 4%. Calculate the required rate of return on equity using the security market line (CAPM) method. O 14.4% O 10.8% O 18.0% O 13.8% O 8.7%