Gardner Electric has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bill rate is 4.00%, and the T-bond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors expect the average annual future return on the market to be 10.50%. Using the SML, what is the firm's required rate of return?

Select the correct answer.

a. 11.87%b. 11.89%c. 11.91%d. 11.93%e. 11.85%