Tangshan Mining Is Considering Issuing Preferred Stock

Multiple Choice

Tangshan Mining is considering issuing preferred stock. The preferred stock would have a par value of $75 and a 5.50 percent dividend. What is the cost of preferred stock for Tangshan if flotation costs would amount to 5.5 percent of par value?

A) 5.50%
B) 5.27%
C) 7.73%
D) 5.82%