ABC Industries is considering a 3-year project that will cost $200 today followed by free cash flows to firm of $100 in year 1, $80 in year 2, and $160 in year 3. ABC has $1000 of assets with a debt-to-value ratio of 40.00%. ABC's before-tax cost of debt is 7.00% and its levered cost of equity is 12.00%. Assuming the tax rate is 35.00%, ABC's unlevered cost of equity is closest to:

10.49%

10.00%

11.14%

9.87%