Lyft intends to issue new common stock. The stock is currently trading at $45.00 per share and the dividend this year was $1.50. You know that dividends are expected to grow at rate of 4.5%. If Lyft anticipates to pay 5.00% per share in flotation costs, what is the cost of equity? Use the dividend growth model to determine the cost of equity.

Group of answer choices

6.61%

There is not enough information to answer this question.

7.13%

7.65%

8.17%