Bonds: Builtrite is planning on offering a $1000 par value, 20 year, 6% coupon bond with an

expected selling price of $1025. Flotation costs would be $55 per bond.

Preferred Stock: Builtrite could sell a $46 par value preferred with a 6% coupon for $38 a share.

Flotation costs would be $6 a share.

Common stock: Currently, the stock is selling for $62 a share and has paid a $4.82 dividend. Dividends are expected to continue growing at 11%. Flotation costs would be $3.75 a share and Builtrite has $350,000 in available retained earnings. Assume a 35% tax bracket. Their after-tax cost of new common is:

A. 20.85%

B. 20.18%

C. 19.78%

D. 19.51%