Royal Mediterranean Cruise Line's common stock is selling for $22 per share. The last dividend was $1.20 and dividends are expected to grow at a 6% annual rate. Flotation costs on new stock sales are 5% of the selling price. What is the cost of Royal's retained earnings?
a) 12.09%
b) 11.45%
c) 11.78%
d) 5.73%