Multiple Choice
JPR Company's preferred stock is currently selling for $28.00,and pays a perpetual annual dividend of $2.00 per share.Underwriters of a new issue of preferred stock would charge $3 per share in flotation costs.The firm's tax rate is 40%.Compute the cost of new preferred stock for JPR.
A) 4.80%
B) 7.14%
C) 8.00%
D) 9.15%
Correct Answer:
Verified
Correct Answer:
Verified
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