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borteleto borteleto
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6 years ago
A company has preferred stock with a current market price of $18 per share. The preferred stock pays an annual dividend of 4% based on a par value of $100. Flotation costs associated with the sale of preferred stock equal $1.50 per share. The company's marginal tax rate is 40%. Therefore, the cost of preferred stock is
A) 28.80%.
B) 24.24%.
C) 22.22%.
D) 14.55%.
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
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Marc18Marc18
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borteleto Author
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6 years ago
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