Detailed Answer
Answer (B) is correct. The company’s cost of equity can be calculated using the WAAC formula. WACC = Weight on equity × Cost of equity + Weight on debt × Cost of debt 1. 12.8% = 80% × Cost of equity + 20% × 8% 2. 12.8% = 80% × Cost of equity + 1.6% 3. 11.2% = 80% × Cost of equity 4. 14% = Cost of equity