A firm issued a bond with current market value of $150 million and 4% yield-to-maturity. This firm will also pay a total dividend on $10 million next year, that will grow at 2% rate in perpetuity. If the cost of equity is 8%, and tax rate is 40% calculate WACC.

Select one:

a.

7.65%

b.

5.35%

c.

4.22%

d.

8.99%