A large utility firm, Lotsa Power, Inc., is currently in the 30% tax bracket pays an annual dividend to preferred stockholders in the amount of 7.3%. The dividend is based on a par value of $30.00 per share, and the stock is currently selling for $27.00 per share. The cost of the preferred stock is

10.57%

5.67%

Cannot be determined from the information provided

3.40%

17.62%