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A firm's preferred stock pays an annual dividend of $7, and the stock sells for $78. Flotation costs for new issuances of preferred stock are

A firm's preferred stock pays an annual dividend of $7, and the stock sells for $78. Flotation costs for new issuances of preferred stock are 5% of the stock value. What is the after-tax cost of preferred stock if the firm's tax rate is 35%?

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