You want to estimate the cost of a firm's hybrid security.The security was issued three years ago at $40/security.The price is currently $42/security.It pays a semiannual dividend of $2.00/security.The company has the one-time option to pay a super dividend of $45/security in 5 years, which would cause the securities to expire (essentially, a buyback option).Your research indicates that the company will exercise this option with a probability of 60%.What is the annualized cost of this firm's hybrid security capital?

A)10.64%B)10.20%C)9.52%