A company's perpetual preferred stock pays an annual dividend of exist7.25 per share. The preferred stock's market value is exist107.54 per share and the company's tax rate is 36%. If the flotation costs for preferred stock are 6%, what is the company's annual cost of new preferred stock financing? 1) 7.71% 2) 7.17% 3) 8.25% 4) 6.74% 5) 7.25%