A firms ordinary shares are trading for $30. The next dividend is $2.80 and is expected to grow by 3% in perpetuity. The firm has issued 10 year annual coupon bonds at a semi-annual yield of 3% pa and a coupon rate of 4% pa. The debt-to-equity ratio is 1.2:1 The corporate tax rate is 30%. What is the firm's after-tax WACC as an effective annual rate? Assume a classical tax system.

a. 7.2547%

b. 7.7879%

c. 7.2245%

d. 6.7601%

e. 6.4242%