Tidewater Fishing has a current beta of 1.21. The market risk premium is 8.9% and the risk-free rate of return is 3.2%. By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.50?

a. 1.88%

b. 2.58%

c. 2.60%

d. 3.10%

e. 3.26%