The WACC of Company ABC is 9.6%. It currently has 40% debt with an interest rate of 6% and 60% equity with a required return of 13% and its tax rate is 25%.

It now changes its capital structure to 20% debt and 80% equity and the interest rate on its debt falls to 5%.

What is its WACC in the new capital structure?

Select one:

a. 11.50%

b. 11.30%

c. 9.95%

d. 10.20%