Addie Inc sells a preferred share for $120. The share pays a quarterly dividend of $1.60. If the company were to sell a new preferred issue, it would incur a flotation cost of 10% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC if its marginal tax rate is 28%?

A) 7.12%

B) 7.90%

C) 8.25%

D) 5.93%

E) 9.08%

(Please show how answer was solved if possible)