Suppose that you calculated a companys current capital structure to be 45% debt, 55% equity yet you believe that the target capital structure is 30% debt, 70% equity. In addition, from a Bloomberg terminal, you pulled a beta of 1.3 for the company. (Assume a 40% tax rate.) What amount for beta would you use in calculating the cost of equity in CAPM?

A) .6

B) 1.1

C) .9

D) 1.3

E) .7