Question
Costly Corporation is considering a new preferred stock issue. The preferred would have a par value of $600 with an annual dividend equal to 15.0%
Costly Corporation is considering a new preferred stock issue. The preferred would have a par value of $600 with an annual dividend equal to 15.0% of par. The company believes that the market value of the stock would be $442.00 per share with flotation costs of $18.00 per share. The firm's marginal tax rate is 40%. What is the firm's cost of preferred stock?
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
8th edition
013342362X, 978-0133423624
