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Hansburg Industrial currently has a WACC of 16.4%. Hansburg is considering changing its capital structure from a D/E ratio of 1 to a D/E ratio

Hansburg Industrial currently has a WACC of 16.4%. Hansburg is considering changing its capital structure from a D/E ratio of 1 to a D/E ratio of 2. With the change, Hansburgs new beta will be 1.5. If treasury bills yield 3% and the expected market return is 11% and Hansburg pays no taxes, what is the new required return for debt?

16.40%

15.70%

17.10%

14.20%

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