Tangshan Mining Is Considering Issuing Preferred Stock

question 17

Multiple Choice

Tangshan Mining is considering issuing preferred stock. The preferred stock would have a par value of $75 and a 5.50 percent dividend. What is the cost of preferred stock for Tangshan if flotation costs would amount to 5.5 percent of par value?

• A) 5.50%
• B) 5.27%
• C) 7.73%
• D) 5.82%

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Definitions:

Tractors

Heavy vehicles designed for agricultural use, primarily to mechanize farming tasks including plowing, planting, and harvesting.

Opportunity Cost

Forfeiting possible rewards from various alternatives when a singular option is chosen.

Crude Oil

A natural fossil fuel consisting of hydrocarbon deposits and other organic materials that can be refined to produce various types of energy products.

Tractors

Heavy-duty vehicles designed primarily for agricultural use, including plowing, tilling, and planting fields.