You are Chief Financial Officer of the ABC Corporation. ABC has two divisions, one of which is retail, while the other is manufacturing. ABC's debt-equity ratio (measured at market value) is one half. The company has $2.5 billion in face value of perpetual bonds which pay an annual coupon of 4% and have a yield to maturity of 10%. ABC's equity has a beta of 1.25. The company faces a 35% tax rate. The risk-free rate of return is 5.6% and the market risk premium, over and above the risk-free rate, is 8%. The company is considering a business expansion in the retail industry. The expansion project will generate $20 million free cash flow per year indefinitely. ABC is planning to maintain the industry average leverage ratio for the expansion project. Companies that operate purely in the manufacturing industry have an average beta of 0.8 and an average debt-equity ratio (measured at market value) of three quarter. Companies that operate purely in the retail industry have an average beta of 1.8 and an average debt-equity ratio (measured at market value) of one quarter. What is ABC's weighted average cost of capital (WACC) for the capacity expansion project? a. 9.6% O b. 13.0% O c. 15.0% O d. 17.3% O e. 12.6%