S Corp. is expected to pay a $2.55 dividend at year end, the dividend is expected to grow at a constant rate of 4.50% a year, and the common stock currently sells for $35 a share. The before-tax cost of debt is 5.50%, and the tax rate is 40%. The target capital structure consists of 30% debt and 70% common equity. What is the companys WACC? Do not round your intermediate calculations.

a.

6.96%

b.

9.05%

c.

9.24%

d.

7.97%

e.

8.39%