Problema company has preferred stock with a current market, Ask an Expert

Finance

Problem:

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. Floatation costs associated with the sale of preferred stock equal $1.50 per share.

Required:

Question: The company's marginal tax rate is 40%. Therefore, the cost of preferred stock is?

Note: Provide support for your rationale.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162924

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