Educational Gaming is considering developing and distributing a new arithmetic app for children. The project is similar in risk to the firm's current operations. The firm maintains a debt-equity ratio of 0.40 and retains all profits to fund the firm's rapid growth. Educational Gaming should determine its cost of equity by __________________.

		using the dividend growth model
		using the capital asset pricing model
		adding the market risk premium to the after-tax cost of debt
		averaging the costs based on the dividend growth model and the capital asset pricing model
		multiplying the market risk premium by (1 - .040)