Arvo Corporation is trying to choose between three alternative investments. The three securities that the company is considering are as follows:

Tax-free municipal bonds with a return of 8.8%.

Wooli Corporation bonds with a return of 11.75%.

CFI Corp. preferred stock with a return of 9.8%.

The company's tax rate is 18.00%. What is the after-tax return on the best investment alternative? Assume a 70% dividend exclusion for tax on dividends.

(Round your final answer to 3 decimal places.)

a. 8.768%

b. 9.635%

c. 7.901%

d. 7.226%

e. 12.044%

THANKS!!