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Frank Underwood, the treasurer of a manufacturing company, thinks that debt (YTM= 11%, tax rate = 40%) will be a cheaper option for acquiring funds
Frank Underwood, the treasurer of a manufacturing company, thinks that debt (YTM= 11%, tax rate = 40%) will be a cheaper option for acquiring funds compared to issuing new preferred stock. The company can sell preferred stock at $61 per share and pay a yearly preferred dividend of $8 per share. The cost of issuing preferred stock is $1 per share. Is Frank correct
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