A Firm Has $2 Million Market Value and It Sells

question 37

Multiple Choice

A firm has $2 million market value and it sells preferred stock with a par value of $100.If the coupon rate on the preferred stock is 8% and the preferred stock trades at $90,what is the cost of preferred stock financing?

• A)8.75%
• B)8.89%
• C)9.21%
• D)9.35%
• E)10.16%

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