Surfside Tacos is thinking of raising new funds by issuing preferred stock which would lead the firm to incur flotation costs of 2%. The new preferred stock would have a stated dividend of $5 per...

Surfside Tacos is thinking of raising new funds by issuing preferred stock which would lead the firm to incur flotation costs of 2%. The new preferred stock would have a stated dividend of $5 per share and is expected to sell for $60. What is the after-tax cost of preferred stock for this firm? Assume a tax rate of 40%.