Question $3$

$2$ pts

Eakins Inc.$\text{'}$s common stock currently sells for $$37\mathrm{.}50$ per share, the company expects to earn $$2\mathrm{.}75$ per share during the current year, its expected payout ratio is $70\%,$ and its expected constant growth rate is $6\mathrm{.}00\%.$ New stock can be sold to the public at the current price, but a flotation cost of $8\%$ would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations.

$0\mathrm{.}27\%$

$0\mathrm{.}49\%$

$0\mathrm{.}54\%$

$0\mathrm{.}45\%$

$0\mathrm{.}40\%$