Regal Cinemas owns movie complexes and has 80 million shares trading at $25/share and $300 million in debt. Its current equity beta (levered) is 1.25 and it plans to raise fresh equity and retire all of its debt. If it does so and the marginal tax rate is 40%, what will its beta be after the transaction?

a.

2.25

b.

0.85

c.

1.55

d.

1.15