National Home Rentals has a beta of 1.38, a stock price of $19, and recently paid an annual dividend of $0.94 a share. The dividend growth rate is 4.5 percent. The risk free rate is 3.1 percent rate of return and the market risk premium is 7.5 percent. National Home Rentals uses the average of these two methods (CAPM and DCF) as their overall cost of internal equity. What is the firm’s cost of internal equity? 7.05 percent 8.67 percent 9.13 percent 10.30 percent 11.56 percent.