You are given the following information: EBIT ( for firms L and U in perpetuity) =$300,000; corporate tax rate (T)=30%; cost of equity for firm U =10%; Cost of debt for Firm L =8%; level of dept for Firm L (D)=$1,200,000. What is the cost of equity for firm L?

1. 15.3%

2. 11.33%

3. 8.53%

4. 10%