Browning Co. expects to earn $3.50 per share during the current year, its expected payout ratio is 30.00%, its expected constant dividend growth rate is 3.90%, and its common stock currently sells for $40.00 per share. New stock can be sold to the public at the current price, but a flotation cost of 14.50% would be incurred. What would the cost of equity from new common stock be?

Select the correct answer.

7.41%

6.75%

7.19%

7.63%

6.97%