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A firm plans to use their investment bankers to issue some new shares of preferred stock. The bankers will charge the firm 5 % of

A firm plans to use their investment bankers to issue some new shares of preferred stock. The bankers will charge the firm

5 %

of the proceeds. The preferred stock will pay an annual dividend of $

8

and will be priced at $

100 .

What will be the cost of preferred stock, rPS

,

including the flotation costs?

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