What is the cost of new common stock of a company, a constant growth stock, that has a year-1 dividend (D1) of $3.5, a growth rate (g) of 3%, a current price (P0) of $40, but the company must pay a flotation cost of $5 per share to sell the new common stock?

A)8.75% b)10% C)11.75% D)13%