Allouez Company's common stock is currently priced at $40.00 a share. The company just paid $2.30 per share as its annual dividend (D0). The dividends have been increasing by 4% annually and are expected to do so indefinitely. What is this firm's cost of equity if they have a 30% tax rate? Pick the closest answer available.
a) 7%
b) 9.98%
c) 9.75%
d) 9.63%
e) 8.15%