The Third Cup Company Has Just Paid a Dividend of $3

The Third Cup Company has just paid a dividend of $3 per share.The dividends are expected to grow at a rate of 4 percent per year forever.The current stock price is $25 per share.The firm faces a tax rate of 40 percent and flotation costs of 5 percent on new stock issues.The cost of equity for new funds is:

A) 9.89%
B) 10.12%
C) 16.48%
D) 16.87%