A firm's preferred stock pays a 12% annual dividend on a $75 par value. the preferred shares sell for $70 each and flotation costs amount to 5% of market price. The firm has a marginal tax rate of 35%. Ehat is the firm's cost of preferred stock?

A. 9.0%

B. 13.5%

C. 12.0%

D. 5.9%

E. 8.8%