$17.$ A firm currently has a cost of equity $($i$.$e$.,$ a required return on its equity$)$ of $15\%.$ It has no debt

outstanding, but bankers have offered to lend to it at an interest rate of $6\%,$ as long as it

maintains a debt$-$to$-$value ratio no greater than $\mathrm{.}3.$ What would the firm$$s new cost of equity be

if it borrows up to this amount of debt, converting to a debt$-$to$-$value ratio of $\mathrm{.}3?$

A$.8\mathrm{.}57\%$

B$.16\mathrm{.}80\%$

C$.17\mathrm{.}57\%$

D$.17\mathrm{.}70\%$

E$.18\mathrm{.}86\%$

Answer: E$.18\mathrm{.}86\%$