Gray's Tools Just Issued a Dividend of $1

Gray's Tools just issued a dividend of $1.60 per share on its common stock. The company is expected to maintain a constant 4 percent growth rate in its dividends indefinitely. If the stock sells for $31 a share, what is the company's cost of equity?

A) 8.81 percent
B) 9.37 percent
C) 9.94 percent
D) 10.32 percent
E) 11.46 percent