Problem $14\mathrm{.}08($Hamada Equation$)$

Situational Software Co$.($SSC$)$ is trying to establish its optimal capital structure. Its current capital structure consists of $30\%$ debt and $70\%$ equity; however, the CEO believes that the firm should use more debt. The risk$-$free rate, $r_{RF},$ is $6\%$; the market risk premium, $R{P}_M,$ is $7\%$; and the firm's tax rate is $25\%.$ Currently, SSC$\text{'}$s cost of equity is $16\%,$ which is determined by the CAPM. What would be SSC$\text{'}$s estimated cost of equity if it changed its capital structure to $50\%$ debt and $50\%$ equity? Do not round intermediate calculations. Round your answer to two decimal places.

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