Last week, Lester's Electronics paid an annual dividend of $2.25 on its common stock. The company has a longstanding policy of increasing its dividend by 3.5 percent annually. This policy is expected to continue. What is the firm's cost of equity if the stock is currently selling for $44.5 a share? 

a. 11.9% 

b. 9.86% 

c. 12.04%

 d. 8.73% 

e. 10.5%