The expected return on a firms stock is 30% and the firm currently has $500 million in debt and $500 million in equity. The firm is contemplating issuing $100 million in new equity and using the proceeds to repurchase $100 million of the firms debt. The firm operates in a perfect world with no corporate or personal taxes or bankruptcy costs. The firm borrows at the risk-free interest rate of 5%. Under the new capital structure, the WACC for this firm will be _____________.

Group of answer choices

20%

Less than 20%

More than 20%