You are given the following information concerning Galgate plc:

Equity: 100,000 shares. The company just paid a dividend of 3. The dividends are expected to

grow by 3% per year indefinitely and the current share price is 30. The return of Galgate's equity has a standard deviation of 24% per annum and a correlation with the market of 0.8.

Debt: 1,000 bonds outstanding, with 20 years to maturity, a coupon rate of 7% and a face value of 1,000. The yield to maturity of the bonds is 4%. There are also 1,500 zero-coupon bonds with the same yield to maturity (4%) and a face value of 1,000. These bonds have 18 years to maturity. The market risk premium is 6% and the standard deviation of the returns of the market is 15%. Treasury bills are yielding 4% and the corporate tax rate is 20%.

Calculate the cost of equity using the security market line (SML) method