Builtrites common stock is currently selling for $42 a share and the firm just paid an annual dividend of $1.20 per share. Management believes that dividends and earnings should grow at 8% annually. Based on this, and a marginal tax rate of 34%, what is the cost of common stock (also known as the cost of retained earnings)?

Group of answer choices

11.10%

7.17%

7.32%

10.86%