Company A has a levered beta of 1.3. It has a market capitalization of $800 million and net debt of $320 million. The risk free rate is 4.0%, the market risk premium is 6.0% and the tax rate is 30%.

Company B is seeking to takeover Company A. Company B's optimal capital structure is a D/E ratio of 60% and its cost of borrowing is 5.5%. What is the WACC that Company B will likely adopt in its bid for Company A?

a.

8.96%

b.

9.35%

c.

9.53%

d.

10.87%

e.

12.65%