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Western Airlines is planning to sell $10 million of preferred stock. The par value of the preferred is $50 per share. The annual dividend will
Western Airlines is planning to sell $10 million of preferred stock. The par value of the preferred is $50 per share. The annual dividend will be 13% (preferred dividends are typically quoted as a percent of par value). The market value of the preferred is $50 per share. Issuance costs are expected to be $2 per share. Western has a tax rate of 21 percent. What is the company's cost of preferred stock?
a) 27% d) 8.12% b) 13.54% e) 7.80% c) 13.00%
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