RichforEver has established a target capital structure of 60 percent debt and 40 percent common equity. The firm expects to earn $400,000 in after-tax income during the coming year, and it will retain 40 percent of those earnings. The current market price of the firm's stock is P₀ = $28; its last dividend was D₀ = $2.20, and its expected dividend growth rate is 6 percent. RichforEver can issue new common stock at a 15 percent flotation cost. What will the marginal cost of equity capital (not the WACC) be if it must fund a capital budget requiring $350,000 in total new capital?

	a.	7.9%
	b.	14.32%
	c.	9.7%
	d.	13.9%
	e.	15.8%