Your firm intends to issue new common stock. Your investment bankers have determined that the stock should be offered at a price of $45 per share and that you should anticipate paying a dividend of $1.5 in one year. If you anticipate a constant growth in dividends of 3.5% per year and the investment banking firm will take 7% per share as flotation costs, what is the cost for this issue of new common stock?

7.08%

6.83%

7.34%

3.83%

3.58%