Bioteknica, an all equity agro$-$chemical firm, is about to invest in a diversification in the consumer pharmaceutical industry. Its current equity beta is $0\mathrm{.}8,$ whilst the average equity $\backslash$beta of pharmaceutical firms is $1\mathrm{.}3.$ Gearing in the pharmaceutical industry averages $40\%$ debt, $60\%$ equity. Corporate debt is available at $5\%.$ If Rm $=14\%,$ Rf $=4\%,$ corporation tax rate $=30\%.$ What would the cost of equity to be used as a suitable discount rate for the new investment if Techno were to finance the new project with $30\%$ debt and $70\%$ equity?

$15\mathrm{.}6\%$

$18\%$

$16\mathrm{.}90\%$

$13\mathrm{.}45\%$