Cullumber Luxury Liners has preferred shares outstanding that pay an annual dividend equal to $30 per...

Question

Question

Answer 1

Answer #1

rate positively ..


After tax cost of preferred stock = Annual dividend/Price today

Note: Preferred dividend are not tax exempt. Therefore question is given
just to confuse us by saying "After tax cost of preferred stock"

After tax cost of preferred stock =		30/214.29
		14.00%

	ans =	14.00%

Answer 2

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