GNK Industries is financed by equity only and the current cost of equity is 10%. The manager is considering using debts to finance a new project. If the plan goes through, the company's debt to equity ratio will be 1/4. If the corporate tax rate is 30% and the cost of debt is 5%, what is the company's after-tax WACC under the new capital structure?

Select one:

a.

9.70%

b.

8.70%

c.

10.00%

d.

10.63%