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ABC Companys investment banker advises the firm it is possible to sell at face value a new issue of $55 preferred stock with a $10

ABC Companys investment banker advises the firm it is possible to sell at face value a new issue of $55 preferred stock with a $10 annual dividend and that they would charge 6% of face value to underwrite the issue.

Question 1: What is the required rate of return at which investors are willing to purchase this new preferred stock issue?

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