Wombat Inc. has a beta of 1.11. The market risk premium is 9%, and T-bills are currently yielding 2.5%. The company's most recent dividend was $1.8 per share, and dividends are expected to grow at a 6% annual rate indefinitely. If the stock sells for $35 per share, what is your best estimate of the company's cost of equity? (Do not round)

Question:

Multiple Choice (Select an answer)

A. 10.78%

B. 11.45%

C. 12.49%

D. 9.71%

E. 11.97%