Perpetual preferred stock sells for $97.50 per share, and it pays an $4.85 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. 4.11%

B. 5.18%

C. 8.01%

D. 7.32%

E. 6.25%