Hiro Corp. common stock is selling for $29.50 per share. The last dividend was $2.40 and dividends are expected to grow at an 8% annual rate. Flotation costs on new stock sales are 11% of the selling price. What is the cost of Hiro Inc.'s new commonstock?

(i) Describe and interpret the assumptions related to the problem. (ii) Apply the appropriate mathematical model to solve the problem. (iii) Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places.