A firm has ordinary shares with a current market price of $50 per share and an expected dividend of $2.32 per share at the end of the coming year. The dividends paid on the outstanding shares over the past five years are as follows:

Year 1: $2.00 Year 2: $2.06 Year 3: $2.12 Year 4: $2.19 Year 5: $2.25

Future dividends are expected to grow at the same rate as the past growth in dividends. The firm expects to sell new shares for $50 minus $2.50 per share representing the underpricing needed to sell the shares. Also, flotation costs are expected to total $2 per share. The cost of the firm's ordinary share equity is ________.

Select one:

a.

14.9%

b.

10.8%

c.

13.8%

d.

15.7%

e.

8.1%