Salmon Inc. has outstanding equity of $4,620 and outstanding debt $3,000. The interest rate on the debt is 7% and the firm's tax rate is 34%. Interest is tax deductible. The unlevered cost of equity is 12% (this is what the required return on equity would be if the firm had no debt). What is the firm's current cost of equity (required return on equity)? Except of taxes, assume that markets are perfect (no bankruptcy, etc.)

13.25%

13.89%

13.92%

14.14%

14.25%