In: Finance
A Company is paying an annual dividend of $3.63 for its preferred stock which is selling for $60.70. There is a selling cost of $3.30. What is the after tax cost of preferred stock if the firm's tax rate is 33%?
A. 6.11% B. 2.02% C. 5.79% D. 6.32%
Cost of preferred stock = Dividend / (Price - selling cost)
Cost of preferred stock = $3.63 / ($60.70 -$3.30)
Cost of preferred stock = 6.32%
Answer: Option D