[单选题]

Use the following data to answer Questions 24 through 27.
·The company has a target capital structure of 40% debt and 60% equity.
·Bonds with face value of $1,000 pay a 10% coupon (semiannual), mature in 20 years, and sell for $849.54 with a yield to maturity of 12%.
·The company stock beta is 2.
·Risk-free rate is 10%, and market risk premium is 5%.
·The company is a constant-growth firm that just paid a dividend of $2, sells for $27 per share, and has a growth rate of 8%.
·The company's marginal tax rate is 40%.The company's cost of equity using the capital asset pricing model (CAPM) approach is:

A.16.0%.

B.16.6%.

C.16.9%.

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