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 per cent 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 per cent and the market rate of return is 12.6 per cent.What is the cost of equity capital for this firm?

A) 12.29 per cent
B) 11.84 per cent
C) 10.28 per cent
D) 12.95 per cent
E) 13.42 per cent