P$.$ Lange Inc. hired a consulting firm to help the company estimate the cost of equity. The yield on Lange$$s bonds is $8\mathrm{.}50\%,$ and firm$$s economists believe that the cost of equity can be estimated using a risk premium of $2\mathrm{.}50\%$ over a firm$$s own cost of debt. What is an estimate of Lange$$s cost of equity from retained earnings?

a$.$

$8\mathrm{.}50\%$

b$.$

$11\mathrm{.}30\%$

c$.$

$11\mathrm{.}00\%$

d$.$

$6\mathrm{.}00\%$