The XY firms common stock is currently selling for $78 per share. The firm expects to pay cash dividends of $8 per share next year. The firms dividends have been growing at an annual rate of 9%, and this is expected to continue into the future. The stock must be underpriced by $4 per share, and flotation costs are expected to amount to $2 per share. The firm can sell an unlimited amount of new common stock under these terms. Calculate Cost of new common stock?

Select one:

a. 10.26%

b. 20.11%

c. 22%

d. 11.25%