Bradshaw Steel has a capital structure with 30 percent debt (all long-term bonds) and 70 percent common equity. The yield to maturity on the company's long-term bonds is 8 percent, and the firm estimates that its overall composite is 10 percent. The risk-free rate, is 5.5 percent, the market risk premium, r,- r, is 5 percent, and the company's tax rate is 40 percent. Bradshaw uses the CAPM to determine its cost of equity. What is the beta on Bradshaws stock?

a. 1.48

b. 1.35

c. 1.25

d. 1.10

e. 1.00