Costly Corporation is considering a new preferred stock issue. The preferred would have a par value of $300 with an annual dividend equal to 15.0% of par. The company believes that the market value of the stock would be $407.00 per share with flotation costs of $24.00 per share. The firm's marginal tax rate is 40%. What is the firm's cost of preferred stock?

Group of answer choices

11.06%

11.75%

12.91%

10.29%

9.33%