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Consider the case of Purple Lemon Shipbuilders Inc. Purple Lemon Shipbuilders Inc. has preferred stock that pays a dividend of $6 per share and sells
Consider the case of Purple Lemon Shipbuilders Inc. Purple Lemon Shipbuilders Inc. has preferred stock that pays a dividend of $6 per share and sells for $100 per share. It is considering issuing new shares of preferred stock. These new shares incur an underwriting (or flotation) cost of 2.2%. How much will Purple Lemon Shipbuilders Inc. pay per share to the underwriter? $2.20 per share $88.02 per share $97.80 per share $2.42 per share
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