Delta Company is considering investing in an independent project that is expected to cost $820,000. The project is expected to generate cash flows of $160,000 for each of the next six years. Delta will finance the project using 40% debt, 50% common stock, and 10% preferred stock. The company plans to issue 30-year bonds that carry a 3% coupon rate. These bonds would sell for $1000, but the company will have to pay a floatation cost equal to 8% of the market value of the bonds. Delta Corp. just paid a $1.50 dividend on its common stock, which will grow at a 7% rate indefinitely. The common stock currently sells $80/share, but the firm will pay a floatation cost equal to 5% of the stocks market value. Deltas preferred stock pays a $8.40 dividend and is currently worth $131.25/share. The company will pay a flotation cost equal to 20% of the market value per share for new preferred stock. The companys tax rate is 30% and management will use NPV to evaluate the project.

B)Find the company's cost of issuing new preferred stock. Round intermediate steps and your final answer to four decimals.