A company has preferred stock that can be sold for $42 per share. The preferred stock pays an annual dividend of 3.5% based on a par value of $100. Flotation costs associated with the sale of preferred stock equal $1.42 per share. The company's marginal tax rate is 0.25. Therefore, the cost of preferred stock is

Instruction: Type your answer as a decimal, and round to three decimal places. E.g., if your answer is 0.0106465 or 1.06465%, should type ONLY the number .011, neither 0.0106465, 0.0106, nor 1.065. Otherwise, Blackboard will treat it as a wrong answer.