Edna Recording Studios, Inc., reported earnings available to common stock of

$5,000,000

last year. From those earnings, the company paid a dividend of

$1.15

on each of its

1,000,000

common shares outstanding. The capital structure of the company includes

45%

debt,

10%

preferred stock, and

45%

common stock. It is taxed at a rate of

30%.

If the market price of the common stock is

$31

and dividends are expected to grow at a rate of

9%

per year for the foreseeable future, what is the company's cost of retained earnings

financing?