Bay James Water Park Company operates in a world with zero taxes and no financial distress.

The firm has a debt/equity ratio of 1.

The cost of equityis 15 percent and the cost of debt is 8 percent.

The only difference betweenLanudiere Resort Company and Bay James Water Park is that Lanudiere Resort has a debt/equity ratio of 2.

What is the cost of equity for Lanudiere Resort?

a) 11.5%

b) 13.25%

c) 15.0%

d) 18.5%