Suppose a particular project's free cash flows in one year will either be $350,000 (with 60% probability) or $510,000 (40% probability). The initial investment required for the project is $80,000, and the project's cost of capital is 13%. The risk-free interest rate is 4%. Suppose that you borrow $50,000 in financing the project. According to Modigliani and Miller proposition II, what is the firm's equity cost of capital equal to?

Select one:

a. 7.5%

b. 15%

c. 14%

d. 14.4%

e. 20%