4. Lenn Inc. is expected to pay a $1.75 dividend at year end, the dividend is expected to grow at a constant rate of 7% a year, and the common stock currently sells for $65.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 60% debt and 40% common equity. What is the companys WACC if all the equity used is from retained earnings? *

a. 6.568%

b. 6.836%

c. 7.267%

d. 7.698%

e. 8.229%