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  3. Study Set
    Fundamental Principles of Finance
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    Exam 8: Capital Structure and the WACC
  5. Question
    Tandem Industries Can Sell New Shares of Preferred Stock for $28.00
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Tandem Industries Can Sell New Shares of Preferred Stock for $28.00

Question 2

Question 2

Short Answer

Tandem Industries can sell new shares of preferred stock for $28.00 per share, but flotation costs will run them $1.00 per share. Tandem's preferred stock currently pays a $3.00 dividend. What is the component cost for Tandem's new preferred equity?

Correct Answer:

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