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Accounting

Problem:

ABC company's preferred stock is currently selling for $24.00, and pays a perpetual annual dividend of $2.40 per share. Underwriters of a new issue of preferred stock would charge $2 per share in flotation costs. The firm's tax rate is 30%.

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Question: Compute the cost of new preferred stock for ABC?

Note: Please provide step by step solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167960

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