A Corporate Investor of Preferred Stock Receiving a Before-Tax Preferred

Multiple Choice

A corporate investor of preferred stock receiving a before-tax preferred yield of 8.5%, and having a corporate tax rate of 30%, would receive an after-tax preferred yield of approximately _____. Assume the tax rate on dividends is 15%.

A) 10.2%
B) 7.7%
C) 8.1%
D) 9.3%