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Compute what is the firm cost of preferred stock

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Reference no: EM132979122

Problem 1: A firm pays $1.80 in annual dividends on its preferred stock, which is currently priced at $45.00. The firm's tax rate is 40% and will incur flotation costs of $2.00 per share. What is the firm's cost of preferred stock?

Select one:

A. 2.67%

B. 4.00%

C. 6.67%

D. 4.19%

Reference no: EM132979122

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