Kazeem Metals Company has a debt ratio of $60\%.$ Interest rate on its debt is $9\%.$ Its unlevered beta is $1\mathrm{.}3$ and tax rate is $40\%.$ Suppose that the riskfree interest rate is $5\%$ and the required rate of return on the market is $12\%.$ Calculate Kazeem's cost of unlevered equity $($i$.$e$.$ rEU$).$ Please use the formula: rEU $=$ wDrD $+$ wErEL.

Question $17$ options:

$1)$

$16\mathrm{.}34\%$

$2)$

$14\mathrm{.}32\%$

$3)$

$16\mathrm{.}44\%$

$4)$

$14\mathrm{.}21\%$

$14\mathrm{.}21\%$ is incorrect.