Multiple Choice
Diggin Tools plans to issue new preferred stock, which has a market value of $85 per share. Holders of the stock will receive an annual dividend equal to $9.35. The flotation costs associated with the new issue were 6 percent and Diggin's marginal tax rate is 30 percent. What Diggin's component cost of preferred stock, rps?
A) 17.00%
B) 11.66%
C) 10.38%
D) 11.70%
E) 11.00%
Correct Answer:
Verified
Correct Answer:
Verified
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