A new business opportunity has a 85% chance of being worth $750000 next year and a 15% chance of being worth $150000. The appropriate expected rate of return is 11%. Assume that the new opportunity will be financed with a$540000 bank loan. What rate of return will the levered equity holder earn if the business pays off $750000 in one year?

A.

30.59%

B.

26.14%

C.

336.23%

D.

951.98%