Shapoval, Inc. issues preferred stock having a par value of $30 per share, with a promised annual dividend equal to 9% of par. The actual market value of this preferred stock is $25 per share, and flotation costs equal $1 per share. This preferred stock is perpetual; in other words, there is no maturity date. The cost of preferred stock is:

8.64%

9.00%

9.38%

10.80%

11.25%