What is the after-tax cost of preferred stock if its price is $25 per
What is the after-tax cost of preferred stock if its price is $25 per share and it pays a $1 per share dividend? Assume the firm’s marginal tax rate is 25% and there are no flotation costs.
A) 5%
B) 9%
C) 3%
D) 4%
E) 1%
ANSWER
D
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