Sentry Manufacturing Paid a Dividend Yesterday of $5 Per Share

Multiple Choice

Sentry Manufacturing paid a dividend yesterday of $5 per share (D0 = $5) .The dividend is expected to grow at a constant rate of 8% per year.The price of Sentry Manufacturing's stock today is $29 per share.If Sentry Manufacturing decides to issue new common stock,flotation costs will equal $2.50 per share.Sentry Manufacturing's marginal tax rate is 35%.Based on the above information,the cost of retained earnings is

A) 28.38%.
B) 24.12%.
C) 26.62%.
D) 31.40%.