EBC Inc. plans to issue a preferred stock at a market price of $80 per share. The floatation cost is 10%.

The dividend rate is 6% of the par value of $100. What is the cost of preferred stock? Ignore the floatation costs.

A.7.5%

B.8.0%

C. 7.0%

D. 6.0%

E. 5.0%

A.

7.5%

B.

8.0%

C.

7.0%

D.

6.0%

E.

5.0%