Sorensen Systems Inc. is expected to pay a $2.80 dividend at year end (D₁ = $2.80), the dividend is expected to grow at a constant rate of 6.00% a year, and the common stock currently sells for $42.50 a share. The before-tax cost of debt is 8.00%, 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. 7.89%

b. 9.62%

c. 9.84%

d. 8.96%

e. 9.29%