Andrew Thomas, CEO of Patterson Technology Incorporated (PTI) is planning next year's capital budget. PTI is at its optimal capital structure, which is 30 percent debt and 70 percent common equity. The company's earnings and dividends are growing at a constant rate of 16 percent. The last dividend, Do, was $1.50, and the company's stock currently sells at a price of $42.50 per share. PTI can raise debt at a 9 percent before-tax cost. PTI projects net income of $860,000, and its dividend payout ratio is 20 percent. If PTI issues new common stock, a 7 percent flotation cost will be incurred. The firm's marginal tax rate is 40 percent. What is the cost of retained earnings? A. 19.04 percent B. 19.22 percent C, 19.47 percent 19.88 percent 20,09 percent