Stock in ABC Enterprises Has a Beta of 1

Stock in ABC Enterprises has a beta of 1.28.The market risk premium is 7.4 percent, and T-bills are currently yielding 3.6 percent.ABC's most recently paid dividend was $1.62 per share, and dividends are expected to grow at an annual rate of 2 percent indefinitely.If the stock sells for $38 a share, what is your best estimate of ABC's cost of equity?

A) 9.78 percent
B) 7.82 percent
C) 9.71 percent
D) 9.41 percent
E) 7.41 percent