Answered: Medco Corporation can sell preferred…

Medco Corporation can sell preferred stock for $84 w $5 per share in dividends. a. Compute the cost of preferred stock for Medco Co Cost of preferred stock %

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 3PROB

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Question

Complete a please

Medco Corporation can sell preferred stock for $84 with an estimated flotation cost of $3. It is anticipated the preferred stock will pay
$5 per share in dividends.
a. Compute the cost of preferred stock for Medco Corp. (Input your answer as a percent rounded to 2 decimal places.)
Cost of preferred stock
%
b. Do we need to make a tax adjustment for the issuing firm?
O Yes
No
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it say 0.0617 is incorrect and answer must be rounded to 2 decimal places, (0.06 is incorrect also)

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