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The tax law discriminates against preferred stock and in favor of debt. Explain. Interest expense is deductible/not deductible for income tax purposes. In contrast, dividends
"The tax law discriminates against preferred stock and in favor of debt." Explain.
Interest expense is deductible/not deductible for income tax purposes. In contrast, dividends on preferred stock are deductible/not deductible. Therefore, from the common stockholders' point of view, the after-tax cost of debt is generally less/more than the cost of preferred stock financing.
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