Blair Brothers stock currently has a price of $50 per share and is expected to pay a year-end dividend of $2.50 per share (D₁ = $2.50). The dividend is expected to grow at a constant rate of 4% per year. The company has insufficient retained earnings to fund capital projects and must, therefore, issue new common stock. The new stock has an estimated flotation cost of $3 per share. What is the companys cost of new equity capital?