Diggin Tools plans to issue new preferred stock, which has a market value of $80 per share. Holders of the stock will receive an annual dividend equal to $9.35. The flotation costs associated with the new issue were 6 percent and Diggin's marginal tax rate is 30 percent. What Diggin's component cost of preferred stock, rps?

11%

10.38%

12.43%

11.7%

17%