Lucid Dreams Co. maintains a debt-to-equity ratio of 1 and has a tax rate of 32 percent. The firm does not issue preferred stock. The pre-tax cost of debt is 9.8 percent. There are 25,000 shares of common stock outstanding with a beta of 1.2 and a market price of $19 per share. The current market risk premium is 8.5 percent and the current risk-free rate is 3.6 percent. This year, the firm paid an annual dividend of $1.10 per share and expects to increase that amount by 2 percent each year. Using an average cost of equity, what is the weighted average cost of capital?

Group of answer choices

8.41 percent

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