Flaherty Electric has a capital structure that consists of $70$ percent equity and $30$ percent

debt. The company's long$-$term bonds have a before$-$tax yield to maturity of $8\mathrm{.}4$ percent.

The company uses the DCF approach to determine the cost of equity. Flaherty's common

stock currently trades at $$45$ per share. The year$-$end dividend $(D_1)$ is expected to be

$$2\mathrm{.}50$ per share, and the dividend is expected to grow forever at a constant rate of $7$

percent a year. The company estimates that it will have to issue new common stock to

help fund this year's projects. The flotation cost on new common stock issued is $10$

percent, and the company's tax rate is $40$ percent. What is the company's weighted

average cost of capital, WACC?

a$.11\mathrm{.}31\%$

b$.9\mathrm{.}25\%$

c$.10\mathrm{.}30\%$

d$.10\mathrm{.}73\%$

e$.7\mathrm{.}48\%$