corporation finance

[florice]

Seven Eleven Stores is planning an expansion project that it desires to finance with newly issued preferred stock. The firm has an outstanding issue of preferred stock that pays a dividend of $4.25 per share, which is trading for $65 a share. The investment bankers have advised Seven Eleven that flatation costs will be 8% per share. What will be the cost of the newly issued preferred shares?


a. 6.5%

b. 7.1%

c. 8.3%

d. 9.7%