A Firm Is Paying an Annual Dividend of $2

question 38

Multiple Choice

A firm is paying an annual dividend of $2.65 for its preferred stock that is selling for $57.00. There is a selling cost of $3.30. What is the after-tax cost of preferred stock if the firm's tax rate is 33%?

• A) 3.30%
• B) 4.93%
• C) 5.79%
• D) 6.11%

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Definitions:

Extrinsic Reward

Rewards given from an external source, such as money or praise, which motivate individuals to perform tasks.

Intrinsic Reward

A type of motivation driven by internal satisfaction rather than external rewards, like enjoying the process of learning.

Job Rotation

A method of employee development where individuals are moved through a variety of positions within an organization to gain exposure to different aspects of the business.

Fitting People

The process of ensuring that employees' skills, experiences, and personalities align well with their job roles and organizational culture.