J&J Inc. is an unlevered firm, and it has a constant expected EBIT of $2 million per year. J&J's tax rate is 0%, and its market value is $12 million. The company has 1.2 million shares outstanding. The firm plans to raise $5 million debt and retire equity with the proceeds. The cost of debt is 10%. Assume Modigliani-Miller's propositions hold true. What is the cost of equity before the "recapitalization"? (a) 21.43% (b) 13.33% (c) 20% (d) 16.67%