Given a before tax cost of debt of 10%, a marginal tax rate of 34%, a security beta of 1.5, a risk free rate of 6%, a market return of 12%, a current dividend on common stock of $2 (just paid), a dividend growth rate of 4%, a current stock price of $20 , equity flotation costs of 10% and a 40% debt weight and 60% equity weight, compute the component cost of new (external) equity using the DCF method.

Group of answer choices

14%

15.11%

14.4%

15.56%