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Cost of Preferred Stock The cost of preferred stock, rp, used in the weighted average cost of capital equation is calculated as the prefered dividend
Cost of Preferred Stock The cost of preferred stock, rp, used in the weighted average cost of capital equation is calculated as the prefered dividend price of the preferred stock, Pp. tax adjustment is made when calculating rp because preferred dividends so tax savings are associated with prefered stock. Quantitative Problem: Barton Industries can issue perpetual preferred stock at a price of $52 per share. The stock would pay a constant annual dividend of $3.98 per share. If the firm's marginal tax rate is 25%, what is the company's cost of preferred stock? Round your answer to two decimal places
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