Problemene Company A has the following capital structure, which it considers to be optimal: Debt Preferred Stock Common Equity from retained earnings Common Equity from issuing new stocks Total Liabilities & Equity $40,000 $20,000 $30,000 $10,000 $100,000 The following information is relevant to Company A: Before-tax cost of debt is 10%. The tax rate is 35% Preferred stock with a dividend of $2 is currently sold to the public at a price of $40 per share. The common stock's last dividend paid was $1 per share, and its common stock currently sells for $45 per share, and dividends are expected to grow at a constant rate of 7%. The company can obtain new capital by selling new common stock to the public with a flotation cost of 5% 2. The cost of Preferred Stock (rp) of Company A is * O a. $5 O b. $30 O c. 10% O d. 5% e. None of the above