A firm has ordinary shares with a current market price of $42 per share and an expected dividend of $2.94 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: $2.16 Year 3: $2.33 Year 4: $2.52 Year 5: $2.72 Future dividends are expected to grow at the same rate as the past growth in dividends. The firm expects to sell new shares for $42 minus $2 per share representing the underpricing needed to sell the shares. Also, flotation costs are expected to total $1.80 per share. The cost of the firm's ordinary share equity is ________.

Select one:

a. 14.9%

b. 13.8%

c. 15.7%

d. 8.1%

e. 10.8%