Anderson's Furniture Outlet has an unlevered cost of capital of 8%, a tax rate of 35%, and expected earnings before interest and taxes of $1,500. The company has $3,500 in bonds outstanding that have a 5% coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?

Group of answer choices

8.67%

9.34%

9.72%

9.99%