Toronto Skaters Company Is an All-Equity Company and Is Able

Toronto Skaters Company is an all-equity company and is able to fund a $1 million investment using cash.The company has a beta of 1.4,the risk-free rate is 3 percent,and the return on the market is 8 percent.Flotation costs for new equity are 3 percent.The tax rate is zero.The appropriate cost of capital is:

A) 0% as the firm is using cash.
B) 0% as the firm is using funds that have already been raised from the capital markets.
C) The required return on the outstanding equity.
D) The cost of equity taking into account the flotation costs.