19 -

Grill Works and More has 8 percent preferred stock outstanding that is currently selling for $58 a share. The market rate of return is 12 percent and the firm's tax rate is 33 percent. What is the firm's cost of preferred stock?

a) 11.33 percent

b) 9.10 percent

c) 12.54 percent

d) 13.79 percent

e) 8.28 percent