Car Rentals Inc. has a beta of 2.50, a stock price of $25, and recently paid an annual dividend of $1.50 a share. The dividend growth rate is 2.5 percent. The market has a rate of return of 11 percent and a risk-free rate of 2% percent. 

What is the estimated cost of equity using the average return of the CAPM and the dividend discount model?

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