Blair Brothers' stock currently has a price of $45 per share and is expected to pay a year-end dividend of $2 per share (D1 = $2). The dividend is expected to grow at a constant rate of 2 percent per year. The company has insufficient retained earnings to fund capital projects and must, therefore, issue new common stock. The new stock has an estimated flotation cost of $2 per share. What is the company's cost of equity capital? 6.05% O 7.25% 6.65% 6.95% O 6.35%