Capital structure is 40% debt, 10% preferred stock, and 50% common equity
Common stock currently sells for	$45.00
The expected CS dividend is	$2.00
Growth rate is	6.00%
Flotation cost on CS	$2.25
Flotation cost on PS	$1.10
Preferred stock sells for	$50.00
PS pays a dividend of	$4.00
Market yield on bonds is	11.25%
Tax rate is	34.00%

Calculate the firm's cost of preferred stock

Select one:

7.43%

8.18%

10.44%