Nelson Enterprises Just Paid an Annual Dividend of $1

Nelson Enterprises just paid an annual dividend of $1.56 per share.This dividend is expected to increase by 3 per cent annually.Currently,the firm has a beta of 1.13 and a stock price of $28 a share.The risk-free rate is 3 per cent and the market rate of return is 10.5 per cent.What is your best estimate of Nelson's cost of equity?

A) 10.11 per cent
B) 9.38 per cent
C) 9.72 per cent
D) 11.48 per cent
E) 8.74 per cent