A Firm Has an Issue of Preference Shares That Pays

question 86

Multiple Choice

A firm has an issue of preference shares 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 preference shares is

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

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