Abacus Inc. issues common stock that is expected to pay a dividend $2.5 next year at a current price of $25 per share. If its expected dividend growth is 4%, what is Abacus's WACC, given it is financed by 20% debt with after-tax cost of debt 3.5% and the rest is financed with common equity? Tax rate is 35%.

• A.

  13.5%

• B.

  11.9%

• C.

  11.5%

• D.

  12.2%

• E.

  14%