Khan Ltds ordinary shares current market price is $36 per share. The company believes that its shares should really be worth $25 per share in current market. Assume company just paid an annual dividend of $5 per share and dividends is expected to improve by 7 per cent per year infinitely and market is fully aware of this. Calculate the cost of ordinary equity for the company which it believes is the most appropriate.

a). 3.75%

b). 2.42%

c). none of the listed answer

d). 2.14%

e). 3.20%