Allison Engines Corporation has established a target capital structure of 40 percent debt and 60 percent common equity. The current market price of the firms stock is P0=$50.6; its last dividend was D0=$2.3 and its expected dividend growth rate is 6.9 percent. What will Allison's marginal cost of retained earnings, rs, be?

A. 13.03%

B. 11.26%

C. 11.76%

D. 12.53%

E. 12.03%