Author Question: What is the after-tax cost of preferred stock if its price is $25 per share and it pays a $1 per ... (Read 57 times)

rosent76 · **on:** Apr 25, 2021

Question 1

The cost of preferred stock is computed the same as
◦ the pre-tax cost of debt.
◦ an annuity.
◦ the after-tax cost of debt.
◦ a perpetuity.
◦ an irregular growth common stock.

Question 2

What is the after-tax cost of preferred stock if its price is $25 per share and it pays a $1 per share dividend? Assume the firm's marginal tax rate is 25% and there are no flotation costs.
◦ 5%
◦ 9%
◦ 3%
◦ 4%
◦ 1%

kbennett34 · **Reply #1 on:** Apr 25, 2021

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