A Firm Has an Issue of Preferred Stock That Pays

question 78

Multiple Choice

A firm has an issue of preferred stock that pays an annual dividend of $2.00 per share and currently is selling for $18.50 per share. Finally, the firm's marginal tax rate is 34%. This firm's cost of financing with new preferred stock is

• A) 10%.
• B) 7.13%.
• C) 10.81%.
• D) 6.6%.

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