Time Warner shares have a market capitalization of $60 billion. The company is expected to pay a dividend of $0.45 per share and each share trades for $40. The growth rate in dividends is expected to be 8% per year. Also, Time Warner has $15 billion of debt that trades with a yield to maturity of 9%. If thefirm's tax rate is 40%, what is theWACC?

A.

7.12%

B.

7.96%

C.

9.22%

D.

8.38%