GPS Inc. wishes to estimate its cost of retained earnings. The firm's beta is 1.3. The rate on 6-month T-bills is 1.5%, and the return on the S&P 500 index is 16%. What is the appropriate cost for retained earnings in determining the firm's cost of capital?

Select one:

a. 19.5%

b. 22.1%

c. 20.35%