The Cost of Capital: Cost of Preferred Stock The cost of preferred stock, rp, used in the weighted average cost of capital equation is calculated as the preferred dividend, Dp, divided by the current price of the preferred stock, Pp-Select-tax adjustment is made when calculating rp because preferred dividends -Select- tax deductible; so Select-tax savings are associated with preferred stock. uantitative Problem: Barton Industries can issue perpetual preferred stock at a price of $57 per share. The stock would pay a constan annual dividend of00 er share firm's marginal tax rate is 40%, what is the company's cost of preferred stock? Round your answer to 2 decimal places the