Apple Records is a company worth $21,600,000. The company is financed entirely by common stock: 480,000 shares at $45 per share. The company is planning on substituting debt for equity, buying back shares and issuing $5,400,000 of 3 percent debt. The tax rate is 35 %. The beta for the unlevered firm is 1.00. What will the beta of the new company be if the company goes through with the plan to add financial leverage?

a. 1.152

b. 1.194

c. 1.225

d. 1.268