Johnson Production Company Paid a Dividend Yesterday of $3

Multiple Choice

Johnson Production Company paid a dividend yesterday of $3.50 per share.The dividend is expected to grow at a constant rate of 10% per year.The price of KayCee's common stock today is $40 per share.If KayCee decides to issue new common stock,flotation costs will equal $4.00 per share.KayCee's marginal tax rate is 35%.Based on the above information,the cost of retained earnings is

A) 26.41%.
B) 20.09%.
C) 19.63%.
D) 17.55%.