Lemur Companys $10 par value common stock currently sells at $100 per share. Lemur has retained earnings of $100,000; once this is exhausted, Lemur will raise any more necessary equity capital through a stock issue. Lemur can raise cash by selling common stock at a $2 per share discount with a $3 per share floatation cost. Annual cash dividends are $7 per share and are not expected to change. The estimated after-tax cost of funds raised by long-term bonds is 5%. The estimated cost of funds raised by preferred stock is 6%. Lemurs preferred capital structure is 30% long-term debt, 20% preferred stock, and 50% common stock. Not counting the $100,000 of retained earnings, the current capital structure is Lemurs preferred structure. What would be Lemurs cost of funds from a common stock sale?

		7.00%
		7.14%
		7.22%
		7.37%