A risk averse CEO takes over a company that has $20\%$ debt and $80\%$ equity in its

capital structure. Its beta was $1\mathrm{.}4$ before the CEO took over. The CEO has the

company use its surplus cash to pay off its debt and revert to an all equity financed

capital structure. The risk free rate is $3\%$ and the expected return on the market is

$10\%.$ The tax rate is $50\%.$ What is the company's new weighted average cost of

capital $($WACC$)$ using the capital asset pricing model $($CAPM$)?$

a$)15\mathrm{.}0\%$

b$)12\mathrm{.}8\%$

c$)11\mathrm{.}7\%$

d$)10\mathrm{.}9\%$