The current price of companys preferred stock on the stock market is 3.6. The preference share has a 20% dividend yield upon a par value of 1. In case of issuance of new preferred share capital, the issue and disposal costs will be 0.30 per share. The current market price of companys common stock on the stock market is 3.9. The companys most recent dividend (D₀) was 0.24 per share and dividends are expected to grow at a steady 2% annual rate for the foreseeable future. The beta coefficient of company is 1.6, the long-term government bond offers investors a yield of 4%, and the market risk premium is 2%.

What is the cost of companys preferred share capital (two decimals, no rounding)?

Select one:

a. 8.82%

b. 6.81%

c. 6.06%

d. 8.23%

e. 7.65%