A Firm Is Paying an Annual Dividend of $2

question 50

Multiple Choice

A firm is paying an annual dividend of $2.50 for its preferred stock which is selling for $50.00.There is a selling cost of $4.00.What is the after tax cost of preferred stock if the firm's tax rate is 33%?

• A) 5.00%
• B) 8.00%
• C) 5.43%
• D) 6.20%

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Definitions:

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