Medco Corporation can sell preferred stock for $84 with an estimated flotation cost of $3. It is anticipated the preferred stock will pay $5 per share in dividends.

a. Compute the cost of preferred stock for Medco Corp. (Input your answer as a percent rounded to 2 decimal places.)

Cost of preferred stock

%

b. Do we need to make a tax adjustment for the issuing firm?

	Yes
	No