Musical Charts Just Paid an Annual Dividend of $2

Musical Charts just paid an annual dividend of $2.45 per share.This dividend is expected to increase by 3.3 percent annually.Currently,the firm has a beta of 1.09 and a stock price of $36 a share.The risk-free rate is 4.2 percent and the market rate of return is 12.6 percent.What is the cost of equity capital for this firm?

A) 10.28 percent
B) 11.84 percent
C) 12.29 percent
D) 12.95 percent
E) 13.42 percent