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Purple Lemon Fruit Company has preferred stock that pays a dividend of $6 per share and sells for $100 per share. It is considering issuing
Purple Lemon Fruit Company has preferred stock that pays a dividend of $6 per share and sells for $100 per share. It is considering issuing new shares of preferred stock. These new shares incur an underwriting (or flotation) cost of 1.8%. How much will Purple Lemon Fruit Company pay per share to the underwriter? $1.80 per share O $1.98 per share O $88.38 per share $98.20 per share Based on this information, what is Purple Lemon Fruit Company's cost of preferred stock capital? 6.11% 05.19% 5.50% O 6.42% Companies make tax adjustments when calculating the (after-tax) cost of preferred stock because preferred dividends tax deductible, so the company bears their full cost
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