If a company with a Weighted Average Cost of Capital of 12.5% and no debt financing must have a beta of:

A. 1.2 if the equity risk premium is 5% and the risk-free rate is 5%

B. 1.0 if the equity risk premium is 7% and the risk free rate is 5%

C. 1.5 if the equity risk premium is 5% and the Risk-Free Rate is 5%

D. 1.5 if the company is risky E. None of the above

**WACC = [(% debt-financed expressed as a decimal) * (After-tax Cost of Debt)] + [(% equity-financed expressed as a decimal) * (Cost of Equity)]