Omega Corporation has 11.2 million shares outstanding, no debt, and an expected rate of return to shareholders of 12.00%. Now, the firm issues $190 million of bonds rated AAA yielding 9%. The firm invests the funds raised in new assets of identical risk to the firms initial assets. After the debt issue, the firms shares trade at $53 per share. Assume the firm pays taxes at a marginal rate of 35% and continuously rebalances leverage. Calculate Omegas cost of equity capital (rE) and after-tax WACC after the debt issue?

a. rE = 21.01%; WACC = 24.25%

b. rE = 11.82%; WACC = 8.51%

c. rE = 12.00%; WACC = 12.00%

d. rE = 12.96%; WACC = 11.24%