Sentry Manufacturing paid a dividend yesterday of $5 per share (D₀= $5). The dividend is expected to grow at a constant rate of 8% per year. The price of Sentry Manufacturing's stock today is $29 per share. If Sentry Manufacturing decides to issue new common stock, flotation costs will equal $2.50 per share. Sentry Manufacturing's marginal tax rate is 35%. Based on the above information, the cost of new common stock is

Select one:

a. 28.38%.b. 31.40%.c. 26.62%.

d. 24.12%.