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A companys perpetual preferred stock currently sells for $120.00 per share, and it pays a $7.50 annual dividend. If the company were to sell a

A companys perpetual preferred stock currently sells for $120.00 per share, and it pays a $7.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 3.00% of the issue price. What is the firm's cost of preferred stock?

a.

6.44%
b.

7.54%
c.

8.22%
d.

5.24%

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