A company's next dividend is expected to be $4.78 per share and the dividends are expected to grow forever at a constant rate of 5.6% per year. The yield to maturity for the company's long-term debt is 7.9% per year. The stock's beta is 1.34, the tax rate is 35%, and the market risk premium is 5.1% per year. If the risk-free interest rate is 3.9% per year, what is the company's annual cost of internal equity financing?

Question 6 options:

1)

11.3%

2)

12.9%

3)

10.7%

4)

11.8%

5)

12.4%