Excel Online Structured Activity: Hamada equation

Situational Software Co$.($SSC$)$ is trying to establish its optimal capital structure. Its current capital structure consists of $20\%$ debt and $80\%$ equity; however, the CEO believes that the firm should use more debt. The risk$-$free rate, $r_{RF},$ is $6\%$; the market risk premium, $R{P}_M,$ is $7\%$; and the firm's tax rate is $40\%.$ Currently, SSC$\text{'}$s cost of equity is $16\%,$ which is determined by the CAPM. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Open spreadsheet

What would be SSC$\text{'}$s estimated cost of equity if it changed its capital structure to $50\%$ debt and $50\%$ equity? Round your answer to two decimal places. Do not round intermediate steps.

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