Schadler Systems is expected to pay a $2.00 dividend at year end (D1), the dividend is expected to grow at a constant rate of 6.00% a year, and the common stock currently sells for $53.00 a share. The before-tax cost of debt is 4.50%, and the tax rate is 50%. The target capital structure consists of 41% debt and 59% common equity. What is the companys WACC if all equity is from retained earnings?

Answers: A. 7.61% B. 3.81% C. 6.69% D. 7.11%