Sorensen Systems Inc. is expected to pay a $2.70 dividend at year end ( D1=$2.70 ), the dividend is expected to grow at a constant rate of 4.50% a year, and the common stock currently sells for $40.00 a share. The before-tax cost of debt is 6.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from retained earnings? Do not round your intermediate calculations. a. 8.06% b. 8.38% c. 8.55% d. 7.74% e. 6.83%