ABC issued a preferred stock 5 years ago. The stock pays a constant $5.8 dividend per...
ABC issued a preferred stock 5 years ago. The stock pays a constant $5.8 dividend per year. The current price of this stock is $75.33. What is the after tax cost of preferred stock marginal tax rate of the company is 21 percent?
A:)7.533%
B:) 5.85%
C:) 6.08%
D:) 7.7%
Homework Answers
D:) 7.7%
Cost of preferred stock = Annual dividend / Stock price
Cost of preferred stock = $5.8 / $75.33
Cost of preferred stock = 0.077 or 7.7%
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