Using the build-up method and assuming that no adjustment for industry risk is required, calculate an equity discount rate for a small company, given the following information:

• Equity risk premium = 5.0 percent (RPm)

• Mid-cap equity risk premium = 3.5 percent

• Small stock risk premium = 4.2 percent (RPs)

• Income return on long-term bonds = 5.1 percent

• Total return on intermediate-term bonds = 5.3 percent

• Company-specific risk premium = 3.0 percent (RPu)

20-year Treasury bond yield as of the valuation date = 4.5 percent