Cartwright Communications is considering making a change to its capital structure to reduce its cost of capital and increase firm value. Right now, Cartwright has a capital structure that consists of 10% debt and 90% equity, based on market values. The risk-free rate is 2% and the market risk premium is 6%. Currently the company's cost of equity, which is based on the CAPM, is 10% and its tax rate is 25%. What would be Cartwright's estimated cost of equity if it were to change its capital structure to 50% debt and 50% equity? Group of answer choices

14.92%

12.37%

12.84%

13.69%