A Firm Has $1 Million Market Value and It Sells

question 48

Multiple Choice

A firm has $1 million market value and it sells preferred stock with a par value of $100.If the coupon rate on the preferred stock is 7% and the preferred stock trades at $95,what is the cost of preferred stock financing?

• A)6.75%
• B)7.15%
• C)7.21%
• D)7.37%
• E)8.12%

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