A Firm Has Issued 10 Percent Preferred Stock, Which Sold

Multiple Choice

A firm has issued 10 percent preferred stock, which sold for $100 per share par value. The cost ofissuing and selling the stock was $2 per share. The firm's marginal tax rate is 40 percent. The costof the preferred stock is

A) 9.8 percent.
B) 6.1 percent.
C) 10.2 percent.
D) 3.9 percent.