The answer is 20 percent but i am not sure how to solve for it.

17) CorpFin Corp is all-equity financed. The stock has a price/earnings (P/E) ratio of 8 and a cost of equity of 12.5%. The stock has a current market value of $50. CorpFin decides to repurchase 1/2 of its shares and substitute an equal value of debt. What is CorpFin's cost of equity following the stock repurchase? (Assume the debt is risk-free with a 5% interest rate, and they are exempt from income taxes.) A. 12.5% B. 5% C. 25% D. 2.5% E. 20%