Answer:
Expected rate of return on equity under the new capital structure is 9.75 %
Explanation:
given data 
Market value of long-term debt =  $20,888 million
Market value of common stock =  $171,138 million
Beta =  1.04
Yield to maturity at 10 year t = 2.167%
Expected return on equity = 8.895% 
Marginal tax rate t =  35%
solution 
we get here cost of unlevered equity  by the cost of levered equity formula that is   
cost of levered equity  = rSU + (rSU-rD) ×  (1-t) × (D÷S)    .................1
here rSL is cost of levered equity and  rSU is cost of unlevered equity and rD is before tax cost of debt and D is  value of debt and S is value of equity.
put here value and we will get  
8.895% = rSU + (rSU-2.167%) ×  (1-35%) × (20,888÷171,138) 
solve it we get 
rSU = 0.084005
cost of unlevered equity  = 8.40 % 
and 
cost of levered equity for new capital structure will be 
put here value in equation 1
cost of levered equity  = 8.40 + (8.40-2.376%) × (1-35%) × ( 20 ÷ 80 ) 
cost of levered equity = 9.75 %