What is the after-tax cost of preferred stock that pays a $12 dividend and sells at $100 if the firm's tax rate is 21%? 8.5% 12.0% 16.2% 7.8%

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter7: Stocks (equity) - Characterstics And Valuation
Section: Chapter Questions
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What is the after-tax cost of preferred stock that pays a $12 dividend and sells at $100 if the firm's tax rate is 21%?
8.5%
12.0%
16.2%
7.8%
Transcribed Image Text:What is the after-tax cost of preferred stock that pays a $12 dividend and sells at $100 if the firm's tax rate is 21%? 8.5% 12.0% 16.2% 7.8%
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