A company's perpetual preferred stock currently sells for $$82\mathrm{.}50$ per share, and it pays a $$4\mathrm{.}00$ annual dividend. If the company were to sell a

new preferred issue, it would incur a flotation cost of $5\mathrm{.}00\%$ of the issue price. What is the firm's cost of preferred stock?

a$.4\mathrm{.}62\%$

b$.4\mathrm{.}85\%$

c$.5\mathrm{.}10\%$

d$.9\mathrm{.}85\%$

e$.5\mathrm{.}35\%$