Determine what is cost of preferred stock to the company

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Question 1: NOP Corporation has 40% of its financing in preferred shares. The shares are currently trading at a market price of $60. The book value of the shares is $50, and they pay a dividend of $3.42. NOP's corporate tax rate is 30%. What is the cost of preferred stock to the company?

Option 1: 4.79%

Option 2: 5.70%

Option 3: 6.84%

Option 4: 3.99%

Reference no: EM132600586

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