Ross Stores, Inc. common stock sells for $84.02 per share. It expects to earn $1.24 per share during the current year, its expected dividend payout ratio is 24%, and its expected constant dividend growth rate is 7.06%. New stock can be sold to the public at the current price, but a flotation cost of 5%% would be incurred. What would be the cost of equity from new common stock?

7.40%

8.61%

8.64%

7.40%