Spencer Bioengineering's Preferred Stock Has a Par Value of $100

question 72

Multiple Choice

Spencer Bioengineering's preferred stock has a par value of $100 and pays a dividend of $4.50. The current price of Spencer's preferred is $75. Spencer's tax rate is 34%. The before tax and after tax cost of preferred equity to Spencer is

• A) 4.5%, 2.97%.
• B) 6.00%, 3.96%.
• C) 6.00% , 6.00%.
• D) 8.04%, 6.00%.

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