Southwest Tours Currently Has a Weighted Average Cost of Capital

Southwest Tours currently has a weighted average cost of capital of 11.3 per cent based on a combination of debt and equity financing.The firm has no preference shares.The current debt-equity ratio is 0.58 and the after-tax cost of debt is 6.4 per cent.The company just hired a new CEO who is considering eliminating all debt financing.All else constant,what will the firm's cost of capital be if the firm switches to an all-equity firm?

A) 12.89 per cent
B) 11.45 per cent
C) 12.62 per cent
D) 14.14 per cent
E) 13.37 per cent