A Corporation Recently Purchased Some Preferred Stock That Has a Before-Tax

question 67

Multiple Choice

A corporation recently purchased some preferred stock that has a before-tax yield of 7%.The company has a tax rate of 38%.What is the after-tax return on the preferred stock?

• A)5.32%
• B)5.60%
• C)5.89%
• D)6.20%
• E)6.51%