1. Warephase Corporation has preferred stock outstanding. The stock has a 16% dividend rate. The stock's market price is $80 per share, and its par value is $75. If new shares are issued, the firm will pay $3.50 per share in flotation costs. The corporate tax rate is 21%. What is the company's cost of preferred stock financing? O 12.40% O 16.73% O 13.46% 9.12% 15.69%
1. Warephase Corporation has preferred stock outstanding. The stock has a 16% dividend rate. The stock's market price is $80 per share, and its par value is $75. If new shares are issued, the firm will pay $3.50 per share in flotation costs. The corporate tax rate is 21%. What is the company's cost of preferred stock financing? O 12.40% O 16.73% O 13.46% 9.12% 15.69%
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 3P
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