Clorox Clorox wants to pursue a project that will broaden the markets in which they currently participate. They want to know what they should use for a hurdle rate or WACC (weighted average cost of capital). You get the following information from their accountant: The dividend growth rate is expected to be 2.5% a year. Preferred stock sells for $178 and pays an annual dividend of $19. There are currently 20 year 3.25% coupon bonds, with a face value of $1,000, that pay semi- annual payments and are non-callable available at a price of $1,010.25. The bond-yield risk premium is 3%. The current risk free rate is 1% and the market risk premium is 8.2%. Clorox has a target capital structure of 40% debt, 7% preferred stock and 53% common equity. Clorox has a current stock price of $235.40 per share. The stock has a Beta of 49 and pays a dividend of $3.84 per year. Clorox has a tax rate of 23% Using the Clorox information provided, what is their cost of common equity using the DCF method? O A. 1.70% OB.3.90% O C.3.94% OD. 4.1796