Maxwell Electronics, a consumer electronics company, plans to expand its operations in the AsiaPacific region. The company has debt of $4 million and assets worth $14 million. Cuprum Electricals Inc., the market leader, has similar revenue, net income, and business risk.

The information of the two companies is as follows:

Debt of Cuprum Electricals Inc. $7 million Equity of Cuprum Electricals Inc. $35 million Levered beta of Cuprum Electricals Inc. 0.8 Marginal tax rate 40% Riskfree rate 5% Market risk premium 10% Based on the information provided, calculate the cost of equity of Maxwell Electronics.

Group of answer choices

10.76%.

13.86%.

13.37%.