A Company Has Preferred Stock That Can Be Sold for $21

Multiple Choice

A company has preferred stock that can be sold for $21 per share.The preferred stock pays an annual dividend of 3.5% based on a par value of $100.Flotation costs associated with the sale of preferred stock equal $1.25 per share.The company's marginal tax rate is 35%.Therefore,the cost of preferred stock is

A) 18.87%.
B) 17.72%.
C) 14.26%.
D) 12.94%.