Riverhawk Store (RS) dividends have been growing at 3 percent annually and are expected to continue this growth rate indefinitely. The company recently paid a dividend of $1.25 per share. Next year, it expects to add $3 million to retained earnings. RP’s common stock is selling for $17.00 per share. The company is expanding and plans to sell new common stock with flotation costs of 4 percent. the company's cost of retained earnings is 10.57%, and its average cost of equity funds is 10.67%,
What is the company’s cost of new equity?