Perpetual preferred stock sells for $97.50 per share, and it pays an $6.85 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

a. 7.32%

b.6.25%

c. 8.01%

d.5.18%

e. 4.11%

???