Panhandle Corp. is calculating its WACC. Its semiannual bonds have a maturity of twenty years and a coupon rate of 6.2%.

The preferred stock has a par value of $5 and pays a dividend of $12.50. The common stock has a current dividend of $2.60. The firm is growing at 8%.

Flotation costs are 10% on bonds, 12% on preferred stock and 15% on common stock. The bonds are currently selling for $1250 while the preferred stock is selling for $100 and the common stock for $70. The tax rate is 30%.

What is the difference between the cost of retained earnings and the cost of new stock?

		0.708%
		0.656%
		0.297%
		0.349%