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 12.25%. Using the SML, what is the firm's required rate of return?

Select the correct answer.

a. 11.35%

b. 11.38%

c. 11.44%

d. 11.47%

e. 11.41%