Buggy Whip Manufacturing Company Is Issuing Preferred Stock Yielding 8

Multiple Choice

Buggy Whip Manufacturing Company is issuing preferred stock yielding 8%. Selten Corporation is considering buying the stock. Assume that Buggy's tax rate is 0% due to continuing heavy tax losses, and Selten's tax rate is 34%. What is the after-tax preferred yield for Selten? Assume the tax rate on dividends is 15%.

A) 7.22%
B) 5.33%
C) 7.64%
D) 8.04%