Builtrites common stock is currently selling for $67 a share and the firm just paid an annual dividend of $2.10 per share. Management believes that dividends and earnings should grow at 9% annually. Since new stock would need to be sold to finance an expansion, Builtrite expects flotation costs to be 5% of the expected selling price of $67 a share. Based on this, and a marginal tax rate of 34%, what is the cost of new common stock?

12.6%

12.3%

8.31%

8.12%