(Computing the cost of preferred stock) Megamini Systems Solutions Ltd. is based in Bangalore, India, and is planning to construct a state-of-the-art building to house its operations supporting back office work for its clients. To fund this project, Megamini plans to issue preference shares with a face value of 500 each. These shares will pay 15 percent dividend on face value. However, due to market conditions, Megamini expects to issue these preference shares at a market price of 460 each.

Calculate the cost of capital for the firm for the preference shares.