A firm has a debt to equity ratio of 20%. Its cost of equity is 15%, cost of debt is 10%, and tax rate is 35% and bankruptcy risk exists. Assume that the risk-free rate is 2%, and market risk premium is 5%. Suppose the firm repurchases stock and finances the repurchase with debt, causing its debt to equity ratio to change to 80%. Assume cost of debt does not change.

Compute the firms new cost of equity? (Please work with 4 decimals in your calculations) (Hint: use M&M proposition with tax and bankruptcy costs)