A company has preferred stock that can be sold for $21.25 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 \$1.25 per share. The company's marginal tax rate is 35%. Therefore, the cost of preferred stock is 16.51%. 17.50%. None is correct. 15.80%. 17.72%