ABC Company has publicly traded $1,000 par value, 4% semiannual coupon bonds which mature in 15 years. These bonds have a current market price of $715. The company also has preferred stock with a $70 par and 6% annual dividend. The market has priced the preferred stock at $91. ABCs common stock has a beta of 1.8. You estimate the risk-free rate to be 2% and the required return on the market to be 11%. The companys average tax rate is 34%.

What is the companys cost of preferred stock?