7. Reingaart Systems is expected to pay a $3.00 dividend at year end (D1 = $3.00), the dividend is expected to grow at a constant rate of 7.50% a year, and the common stock currently sells for $65 a share. The before-tax cost of debt is 8.00%, and the tax rate is 40%. The target capital structure consists of 50.00% debt and 50.00% common equity. What is the company's WACC if all equity is from retained earnings?

Select the correct answer.

7.56%

8.46%

7.86%

7.26%

8.16%