ABC, Inc. has a D/E ratio of 1.2. The firm has a cost of equity of 12% and a cost of debt of 8%. What will the cost of equity be if the target capital structure becomes 67% debt and 33% equity? The cost of debt does not change. Ignore taxes. Choose one of the following answers.
A.10.56%
B. 11.12%
C. 13.51%
D. 13.64%