LePage Co$.$ expects to earn $$2\mathrm{.}00$ per share during the current year, its expected payout ratio is $50\%,$ its expected constant dividend growth rate is $5\mathrm{.}50\%,$ and its common stock currently sells for $$31\mathrm{.}00$ per share. New stock can be sold to the public at the current price, but a flotation cost of $5\%$ would be incurred. What would be the cost of equity from new common stock?

Hint: Use the formula: $r_e=\frac{D_1}{P_0(1-F)}+g$

This is the formula for the constant growth model, taking into account the flotation cost. In fact, the flotation cost reduces the amount of cash$/$sales price the company should receive; that is$,$ company does not receive the selling price, the commission or the flotation cost will be deducted from it$.$

a$.9\mathrm{.}40\%$

b$.8\mathrm{.}90\%$

c$.8\mathrm{.}23\%$

d$.8\mathrm{.}73\%$